ISSUE 51: Credit Insurance News Digest
Business Information: Latest Reports and Business Shorts
Late payments puts many SMEs perilously close to bankruptcy.
Latest research from Bacs has revealed that 76% of UK businesses are being forced to wait at least a month beyond their agreed contract terms before getting paid and that the total the amount owed in late payments stands at £41.5 billion. The Bacs figures also reveal that SMEs (companies employing fewer than 250 people) are owed £32.4 billion (down from £39.4 billion in January 2014), while Corporates (companies employing 250 or more people) on the other hand are owed around £9.1 billion (up from £6.7 billion in January 2014). The average late payment burden shouldered by SMEs now stands at £31,901, which the research warns: "puts many SMEs perilously close to bankruptcy with £50,000 being the maximum that SMEs in the survey say they could bear before going to the wall." 25% of SMEs state that £20,000 or less is enough to jeopardise their business prospects. To view the news release go to
The CBI advises that UK growth continues to outshine its counterparts in Europe and "progress is 'steady as she goes"
. The CBI has advised that UK GDP growth is expected to remain steady throughout this year, rising by 0.7% each quarter. GDP is then forecast to grow strongly in 2016, by 0.6% per quarter and 2.6% over the year as a whole. However, the UK's export performance has remained disappointing. Although the CBI expects some improvement ahead, with growth increasing from 2.9% this year to 5.5% in 2016, with import growth set to rise firmly due to strong domestic demand, the net trade contribution to GDP growth will be "small at best". Rain Newton-Smith, CBI Director for Economics, said: “The UK is in good shape compared with other economies, with both investment and household spending underpinning economic growth. But there are still risks to exports from a shaky Eurozone." To view the CBI's news release go to
Report finds that businesses with fewer than 50 employees are twice as likely as large corporates to report problems with late payment.
A new report from ACCA (the Association of Chartered Certified Accountants) has found that the culture of late payment among businesses inhibits the ability of the world's smallest organisations to take on more employees. Charlotte Chung, ACCA's senior policy adviser on SME issues said: “Microbusinesses and other small enterprises are less likely to increase headcount when faced with late payment. Compared to large corporates, we found that the effect of late payment on small businesses who want to expand was significantly greater, by 54% and 47% respectively.” The report found that businesses with fewer than 50 employees are typically twice as likely as large corporates to report problems with late payment. To view the report go to
UK to fall out of the world’s top 10 largest economies by 2050.
According to the latest in PwC’s series of reports on ‘The World in 2050’, the UK is predicted to drop to 11th place in the rankings of the world’s largest economies by 2050. However, the report also finds that the UK is doing well compared to its G7 peer group in terms of growth, which is projected to average around 2.4% per annum over the period to 2050. This is similar to the US and above growth rates in the major Eurozone economies, which are only projected to average around 1.5-2% per annum for the same period. John Hawksworth, PwC’s chief economist, said: “Emerging economies like Indonesia, Brazil and Mexico have the potential to be larger than the UK and France by 2030. Indonesia could rise as high as 4th place in the world rankings by 2050 if it can sustain growth-friendly policies. . . But despite expecting the UK to drop out of the top 10 largest economies by 2050, the projected average UK growth rate to 2050 is stronger than other large Western European economies such as Germany, Italy and Spain”. To view PwC's news release with a link to the full report go to
UK mid-market outstrips the German Mittelstand.
Mid-sized businesses in the UK have weathered the global downturn better than those in the renowned German Mittelstand, according to new figures released by BDO. The snapshot of the European mid-market (firms with turnover between £10 million - £300 million annually) released by BDO, shows that the turnover of the UK's mid-sized firms (€1.92 trillion) now exceeds that of the German Mittelstand (€1.78 trillion). Since 2009, the Mittelstand has grown by 12% compared to the mid-market by 33%. The UK has also overtaken Germany in terms of the number of people employed in their respective mid-markets – the UK employing 9.3 million people compared to Germany's 9.2 million. Mid-market growth in Italy and France has also surpassed that of Germany at 16% and 20%, respectively. To view BDO's news release go to
January sales prove a damp squib for the UK high street.
Low consumer confidence and continued discounting has left high street retailers rueing a slow start to the new year, according to figures released in BDO's monthly High Street Sales Tracker. In January, the high street grew just 2% year-on-year, predominately held up by the post-Christmas sales. But while the first week of 2015 produced the strongest weekly like-for-like figures for nine months (up 10.3%), none of the following four weeks managed even 1% year-on-year growth. Sophie Bevan, Head of Retail and Wholesale at BDO LLP, said: "The widespread discounting strategy that many retailers have adopted towards the latter part of 2014 has had a knock-on effect on the traditional January sales. Following tradition, shoppers flocked to the stores in that first week after Christmas, but after that they lost interest pretty quickly. This is a completely different picture to last year, when we saw like-for-like growth of over 17% in the third week of January." To view BDO's news release go to
Up to 50 oil & gas businesses at risk of being pushed into administration.
According to the latest Begbies Traynor Red Flag Alert data for Q4 2014 the number of oil & gas businesses experiencing ‘Significant’ distress has increased by 69% to 486 compared to 288 in the equivalent period last year, or a rise of 17% in the last quarter alone (Q3 2014: 416). A further breakdown of the sector shows that the real victims of the oil price slump have been the businesses providing services to the oil and gas industry, with ‘Significant’ distress in companies more than doubling from 93 to 201; a massive 116% increase on a yearly basis and a 31% increase in the last quarter alone (Q3 2014: 154). Julie Palmer, Partner at Begbies Traynor, said: “We expect there to be a major wave of consolidation in the industry as businesses race against time to deliver cost synergies or face falling into greater distress. In the absence of successful consolidation, we expect that as many as 50 companies in the sector face administration in the next eighteen months.” To view Begbies Traynor's news release go to
Small businesses in the US improve their risk and payment behaviour across the board.
Experian has announced new insights from its Experian/Moody’s Analytics Small Business Credit Index that showed that credit conditions for small businesses in the US reached the highest level on record, improving for the third consecutive quarter. According to the most recent report, outstanding credit balances grew by 2.2% from a year ago, while delinquency rates declined to a cyclical low of 8.5% - both of which contributed to the improvement in the index. Findings from the report also showed that small businesses have improved their risk and payment behaviour across the board. Most notably, over the last year, small businesses have reduced the number of days they paid their bills beyond contacted terms by full a day, or more than 19%. Over the same time period, the average commercial risk score for a small business rose 3.1% to reach 61.6, while bankruptcy rates dropped significantly, with 10.9% fewer businesses filing. To view Experian's news release go to
UK economy growing at a steady pace.
Economic growth was slightly slower in the three months to February, but still maintained a strong pace, according to the latest CBI growth indicator. The survey of 842 respondents across manufacturing, retail and services showed continued solid growth in the private sector, with a balance of +19% in February. Whilst the pace of growth eased (from +23% in January), it remained in line with the average rate over the past four months. The overall outlook for the next quarter is positive, with growth expected to rise further (+26%). Rain Newton-Smith, CBI Director of Economics, said: “The economy is heading steadily along the right track. The post-Christmas dip in retail sales was a surprise, but it’s encouraging that firms’ overall growth expectations are upbeat across all sectors." To view the CBI's news release go to
UK Exporter confidence is growing despite global uncertainty.
The majority of British exporters (58%) believe their profitability will increase this year, despite ongoing political volatility in the eurozone and Ukraine, according to a report released by the British Chambers of Commerce (BCC) and DHL Express. The volume of trade documentation index issued by Accredited Chambers of Commerce increased to 117.43, demonstrating that UK businesses are growing internationally and breaking into new markets overseas. The report also found that manufacturing firms are more confident about improving their turnover than they were last quarter (66%, compared to 61% in Q3 2014) and a third of exporters (36%) reported increases in export sales compared with only 18% who said they fell. To view the BCC's news release go to
Forum welcomes much needed moves to provide greater teeth to the Prompt Payment Code.
Major changes to the Prompt Payment Code have recently been announced to encourage large firms to commit to 30 day payment terms as standard with a 60 day maximum. Although the code remains voluntary, businesses will be actively encouraged to comply. In addition, a new Code Compliance Board, will investigate challenges made against signatories to the code. Phil Orford MBE, chief executive at the Forum of Private Business (FPB), commented: “We welcome that the Government recognises that more than 60 days is unreasonable in most circumstances . . . the government’s moves to provide much needed teeth to the Prompt Payment Code are what many small business suppliers have wanted to see." To view the FPB's news release go to
OECD GDP growth slows marginally to 0.5% in the fourth quarter of 2014.
According to provisional estimates, growth of quarterly GDP in the OECD area slowed marginally to 0.5% in the fourth quarter of 2014, down from 0.6% in the third quarter. Amongst the Major Seven economies, GDP growth slowed most in the US, easing to 0.7% compared with rates of 1.2% and 1.1% in the two previous quarters. Growth also slowed in the UK to 0.5%, compared with 0.7% in the previous quarter. On the other hand, in Japan, growth picked up strongly (to 0.6% following two quarters of contractions of minus 0.6% and minus 1.7%). Growth also picked up strongly in Germany (to 0.7% compared with the relatively flat two previous quarters), while in France growth slowed (to 0.1% compared with 0.3% in the previous quarter). Economic growth was flat in Italy. While reflecting a small improvement compared with the previous quarter, it marked the fourteenth consecutive quarter without expansion. Year-on-year GDP growth for the OECD area remained stable at 1.8% in the fourth quarter of 2014. Among the Major Seven economies, the UK recorded the highest annual growth rate (2.7%), followed by the US (2.5%). In Japan and Italy, GDP contracted by minus 0.4% and by minus 0.3% respectively. For 2014 as a whole, GDP rose by 1.9% in the OECD area, up from 1.4% in 2013. To view the OECD's news release go to
'GDP Growth - Fourth Quarter 2014, Quarterly National Accounts, OECD'. © OECD, 2015.
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