ISSUE 61: Credit Insurance News Digest

Business Information

UK SMEs are owed £67 billion in unpaid invoices. According to latest research from the Asset Based Finance Association (ABFA), British SMEs are owed £67.4 billion in unpaid invoices, up 8% from £62.5 billion in the last year alone, and 36% from £49.5 billion in 2011. However ABFA explains that even this £67.4 billion figure in unpaid invoices is likely to be a conservative estimate of the true value of unpaid invoices, as it only reflects the invoices of 180,000 SMEs that report detailed accounts. The true total value is likely to be significantly larger. Previous research from the ABFA also showed that SMEs are now waiting an average of 72 days for payment of invoices, up from 61 days at the height of the recession in 2009. To view ABFA's news release go to http://www.abfa.org.uk/news/101/UK-SMEs-owed-GBP-67bn-in-unpaid-invoices.

Intrum Justitia finds that 37% of B2B debts in Europe remain unpaid after 30 days. According to new research by Intrum Justitia, 37% of all outstanding B2B debts in Europe are unsettled after 30 days and 3.1% of yearly revenues have to be written off because companies do not receive sufficient payment. This corresponds to EUR 289 billion. Businesses in the Construction and Building Sector see 3.9 % of their revenues having to be written off and are one of the sectors that are impacted the most from late payments. The average payment term given to B2B clients is 28 days, however, 40% of all outstanding debts are paid in more than 31 days and as much as 11% of all outstanding debts in the sector take more than 90 days to settle. To read Intrum Justitia's news release go to http://news.cision.com/intrum-justitia-ab/r/late-payments-hampers-growth-and-job-creation---yet-37--of-debts-in-europe-remain-unpaid-after-30-da,c9836816.

Late payment the biggest factor to blame for UK business current VAT arrears. Latest research from LDF shows that UK businesses owe almost £2.6 billion to HMRC in overdue VAT payments, up from £2.55 billion in 2014. This figure has remained consistent in recent years, despite the improving economic climate. LDF's Managing Director, Peter Alderson, explains that one of the biggest factors is likely to be the fact that businesses are waiting longer to receive payment from suppliers – currently standing at around 72 days. "Should a client pay late, the business is still expected to pay VAT on those invoices, despite having less cash available to do so." The present 20% VAT rate may also be having an effect, as it now represents a significantly larger tax consideration than pre-2011. To read LDF's news release go to http://www.ldf.co.uk/avoid-overdue-payments-with-a-short-term-vat-loan/.

The UK's business growth environment ranks 27 out of 60 economies. The UK's business growth environment is improving according to the Grant Thornton Global Dynamism Index (GDI). The UK now ranks 27 out of 60 economies, having rising 7 places from the previous iteration of the index. However, key competitors Germany (11), the US (12) and France (23) rank higher. Globally, Singapore offers the most promising business growth environment for dynamic businesses as a result of a strong financing and regulatory environment. Israel (rank 2) has also risen six places this year. Australia (rank 3) drops two places but still ranks in the top five for business operating environment and labour market. To read Grant Thornton's news release go to http://www.grantthornton.co.uk/en/news-centre/economic-stability-and-robust-technology-are-main-attractions-of-uk-to-foreign-investment-says-global-business-growth-environment-index/.

BCC: ‘Two-tier’ growth continues, with alarm bells for trade aspirations. The latest British Chambers of Commerce (BCC) Quarterly Economic Survey shows that Britain’s two-tier growth trend continues. While both manufacturing and service balances were generally weaker this quarter, manufacturing balances declined to a much larger extent than in services and nearly all key national manufacturing balances remained stagnant or fell, painting a picture of prolonged, slow manufacturing growth. In addition, the balance of manufacturing firms exporting their products reached a six year low. Overall, the BCC advises that the results signal moderate economic growth over the next year, but warns that the UK recovery is facing serious global challenges. To read the BCC's news release with a link to the full report go to http://www.britishchambers.org.uk/press-office/press-releases/bcc-%E2%80%98two-tier%E2%80%99-growth-continues,-with-alarm-bell-for-trade-aspirations.html.

UK growth remains strong and expectations are upbeat. According to the latest CBI Growth Indicator, the rate of UK economic expansion dipped slightly in the three months to September following a near record-breaking previous month – but growth is still strong The Indicator found that the business & professional services and retail sectors continue to show robust growth, but manufacturing stalled in the quarter to September for the first time in almost two and a half years. Firms anticipate another strong expansion in business volumes over the next three months. To read the CBI's news release go to http://news.cbi.org.uk/news/uk-growth-remains-strong-and-expectations-are-upbeat1/.

Declining trend in financial health of South African businesses in Q2 2015. The latest Experian Business Debt Index (BDI) has revealed that the financial health of South African businesses has fallen to its lowest point since the financial crisis in 2009. “Although the reading has remained above the 0.0 level - which distinguishes between improving and deteriorating business debt conditions - the reading is the worst since 2009, when the index reached negative levels,” says Michelle Beetar, Managing Director of Experian South Africa. “This indicates that the rate of improvement in business debt conditions has indeed diminished significantly, in line with worsening economic conditions both domestically and abroad.” As a corollary, the BDI also found a gradual increase in the number of outstanding debtor days from the 43.6 days for October 2013 to 51.4 days in May 2015. To read Atradius' news release https://www.experianplc.com/media/news/2015/business-debt-stress-increases-in-line-with-worsening-economic-conditions/.

The optimism of European family businesses improves by nearly 50% in two years. The European Family Business Barometer from KPMG and European Family Businesses (EFB) has found that 75% of family businesses across Europe are optimistic in their forecasting. This represents a jump of nearly 50% from the 54% who expressed positivity two years ago. At 84% even greater confidence is suggested in the UK, which may be due to the higher proportion to have grown their turnover – 79% compared to 58%. Gary Deans, KPMG’s UK head of family business, commented: “It’s pleasing to see both the extent of the confidence those leading family businesses have in their prospects, and that they are backed by a positive curve in their major performance indicators. To read KPMG's news release go to http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/NewsReleases/Pages/increased-competition-fails-to-dent-high-confidence-levels-in-family-businesses-acrossthe-uk-and-europe.aspx.

About this issues's sponsor: XL Catlin
Our insurance and reinsurance companies provide property, casualty, professional and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises globally. Clients look to XL Catlin for answers to their most complex risks and to help move their world forward.
Powerful analytics, deeper insights, and market-leading technologies. We at XL Catlin are open to new ideas and ready to take on difficult challenges — from the most familiar to the most complex.
You need innovative, creative solutions to your risks. We’re here to find them.

We’re here to help your business move forward. With an incredible blend of people, products, services and technology, we’re looking at risk in a new way. From insurance to reinsurance, we can help you find innovative answers for a changing world.

To learn more, visit xlcatlin.com.