ISSUE 53: Credit Insurance News Digest
UK businesses reveal the scope of late payment problems.
According to Hilton Baird's latest Late Payment Survey, almost a third of the time (31%) British businesses spend on credit control is spent chasing overdue debt and 30% now classify more than 10% of their debtor book as over 90 days old. In addition, as a direct result of poor payment practices, almost one in three (30%) have had to increase borrowing, nearly one in five (19%) had to delay payments to HM Revenue & Customs, while one in ten were forced to turn away new business. And, it appears that the problem is worsening. The annual survey showed that the average invoice is now paid 22.5 days beyond agreed credit terms - the longest recorded delay since the survey began in 2011. To view Hilton Baird's news release go to
. A link to the full report is given. A handy videographic which highlights some of the headline stats is also available at
Top 10 global retailers show modest growth in 2014.
According to the Global Powers of Retailing report from Deloitte Touche Tohmatsu Limited in conjunction with STORES Media, revenues for the world’s top 10 largest retailers reached $1.3 trillion in the last fiscal year. This is a 2.9% increase from the prior year indicating modest growth. The report also found that the average size of the top 10 retailers exceeded $129 billion and half of top 10 retailers are US-based companies. Walmart remained the world's largest retailer, with retail revenue totaling 4.5 times that of its nearest competitor. Costco moved into second place in 2013 from third in 2012, continuing its ascent up the ranking. Carrefour, Schwarz Group, Tesco and Kroger then ranked in marginal descending order. To view Deloitte's news release go to
UK SMEs issue call to arms against big business bullies.
A major new poll from the Forum of Private Business (FPB) has revealed that the growth of UK SMEs is being undermined by spiralling costs of doing business, suffocating red tape and bullying tactics from big businesses. 70% of respondents stated that behavioural late payment had been a problem in the last 12 months. The poll also revealed a major crisis of trust in big business amongst British SMEs, with utilities companies (79%) and banks (69%) singled out as the least likely to take responsibility for their actions by small and medium sized business owners. By contrast, the majority of SMEs (80%) believe that the UK’s larger private family-owned firms are the most trustworthy enterprises. To view the FPB's news release go to
Small firms have little confidence in the Prompt Payment Code, says FSB.
New research published from the Federation of Small Businesses (FSB) suggests that only one in five (21%) FSB members are confident that the Prompt Payment code will be enough to address the UK's poor payment culture. Two fifths (39%) of businesses questioned were on average offered terms longer than 30 days for payment, and 43% said they have waited over 90 days beyond the agreed payment date before they got the money they are owed. In December 2014, the FSB also revealed that almost one in five small businesses had been subject to some form of supply chain bulling and 5% had experienced the so called ‘pay to stay' practice used by Premier Foods, who asked suppliers to pay a flat fee in order to be considered for future contracts. To view the FSB's news release go to
New Prompt Payment Code website and principles launched.
The Chartered Institute of Credit Management (CICM) has advised that signatories of the UK's Prompt Payment Code (PPC) will have received a letter announcing the formal launch of the new PPC website and confirming that, in addition to existing Prompt Payment Code principles, the Code will also now promote 30-day payment terms as the norm and include a maximum 60-day payment term (defined as paying 95% of invoices within 60 days, unless there are exceptional circumstances). In addition, signatories will be required to avoid any payment practices that are grossly unfair and adversely affect their suppliers, and to report on payment performance annually for small and medium sized signatories, (on a comply or explain basis), and half-yearly (for large signatories). A new Compliance Board has also been appointed with a monitoring and enforcement role. To view the CICM's news release go to
The outlook for UK retailers is looking brighter.
According to the latest CBI monthly Distributive Trades survey, UK retail sales recovered in the year to March after last month’s disappointing figures. The survey of 126 firms showed that after sales growth ground to a near halt in February, volumes grew solidly in March and are expected to grow at a broadly similar pace in April. Sales growth for chemists reached a near 17-year high, while furniture and carpets businesses also reported decent growth. In contrast, sales were flat among grocers and fell in footwear & leather. Rain Newton-Smith, CBI Director for Economics, said: “The outlook ahead is looking bright. . . However, the retail sector isn’t in the clear yet, with some companies, especially food retailers, still feeling the heat from stiff price competition.” To view the CBI's news release go to
Late Payment bullies liable for compensation claims in £millions.
Lovetts is warning major businesses who have consistently paid their suppliers late that they could be liable for compensation claims amounting to millions of pounds. The warning comes as the Groceries Code Adjudicator launches an investigation into Tesco and its late payment practices to its suppliers, and the government announces plans to bring in tough new laws and bulk up existing codes of practice to tackle the issues of late payment. Lovetts has calculated that businesses that consistently pay their suppliers late, in particular large businesses with a significant number of suppliers such as Tesco, could face compensation claims amounting to over £60 million should their agreements be subject to the Late Payment of Commercial Debts (Interest) Act 1998. To view Lovetts's news release go to
Positive UK GDP figures mean the UK's GDP is now 3.7% above its pre-crisis peak.
The Office of National Statistics (ONS) has advised that it has revised UK GDP growth in Q4 2014 up from 0.5% to 0.6%. Annual GDP for 2014 as a whole is now estimated to have grown by 2.8%, revised up 0.2%. This mean Britain's GDP is now 3.7% above its pre-crisis peak. To view the ONS' latest figures go to
Adapted from data from the Office for National Statistics licensed under the Open Government Licence v.3.0.
New York, London, Hong Kong and Singapore remain the four leading global financial centres.
The latest Global Financial Centers Index (by the Z/Yen Group) has shown that New York continues to be the leading global financial centre, with London - which is only one point behind on the 1,000 point scale - in second place. Hong Kong and Singapore are in 3rd and 4th place respectively. Tokyo, in fifth place, is 32 points behind the leaders, while Zurich is the next European centre in sixth place. Overall, 43 financial centres climbed in the ranks, 30 centres declined and 8 centres experienced no change. Dublin climbed furthest, up 18 places to 52nd. To view the Z/Yen Group's news release with a link to the full report go to
About this issue's sponsor:
XS Reserve is a new approach to credit risk funding.XS Reserve is a new approach to credit risk funding.
XS Reserve is an innovative and flexible new product designed to support Treasurers/senior financial managers seeking to stabilize cash flow and reduce operating costs. By cash funding receivables volatility, XSR avoids the need for expensive standby liquidity facilities to cover bad debt losses. The insurance cover responds to losses as they arise up to the full contract value from day one, but importantly allows reserves to be developed without incurring the ‘sunk cost’ of ground up credit insurance cover, and so compliments AIG’s XOL cover.
The basic structure
Agreed level of reserve funded by monthly increments over a period of up to 3 years
- Full loss payable from outset irrespective of funding to that date
- Reserve assignable to third party (including bank/trade financier)
- Reserve remains an asset in insured’s accounts (with lien to underwriter in event of loss)
- Cumulative balance reverts to insured subject loss experience over period
New approach to funding deductibles can also be applied to cover captive programme ‘risk gap’
Acts as alternative to standby LoCs
Enables enhanced advance rates on funding programs
Businesses can access a more cost effective XOL trade credit solution rather than pay away for the sunk cost of ground up cover, while still benefitting from immediate credit risk mitigation
Businesses don’t have to worry about finding emergency cash funds if they face unexpected losses falling within the deductible
Trade Credit XS Reserve can support businesses’ bank funding by providing banks with immediate cash collateral
Once the reserve has been built up it can be used to establish a captive for the business to serve other lines of insurance business
The product was designed by Alastair Malcolm who had previously created the concept of XoL credit onsurance. He and David McKibbin developed the idea to meet the growing gap created by the withdrawal of banks from lending and the provision of credit following the financial crisis.
For further information:
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