ISSUE 64: Credit Insurance News Digest

Business Information

48% of UK Credit Managers in a CICM survey describe their appetite for risk as more cautious than ever before. According to the latest (Q3 2015) research from the Chartered Institute of Credit Management (CICM), sponsored by Tinubu Square, 47% of credit managers have had to pursue what they consider to be a large claim against a debtor in the last year, and 23% of respondents had pursued more than one large claim. 29% of credit managers surveyed also said that they are encouraging their company to change its appetite for risk when setting trade credit terms, with 48% describing themselves as more cautious than ever before. In addition, the research found that business confidence and the outlook for growth appear to be stuttering. However, both sectors remain comfortably above the 50-point threshold, indicating that overall confidence and performance remains positive. To read CICM's news release go to http://www.cicm.com/news-business-growth-splutters-record-highs-cicm-uk-credit-managers-index/.

Survey shows that companies in the south and periphery of Europe are more confident and willing to take risks than those in the North. According to Deloitte’s latest European CFO Survey, there has been a distinct shift within Europe, with companies in the south and periphery of the continent more confident and willing to take risks than those in northern countries. 58% of Ireland’s CFOs report growing optimism, with a high proportion of CFOs in Spain (54%), Poland (50%) and Portugal (47%) also more optimistic. In contrast, optimism is weakest in northern European economies, with just 14% of CFOs in both France and Norway saying they are more optimistic - followed by Germany and the UK (both 18%). The Survey also found that risk appetite is highest in Italy, where 56% of CFOs say now is a good time to take risks, followed by Ireland (48%), the UK and Spain (both 47%). Risk appetite is lowest in Norway and Germany, (just 20% say now is a good time to take risks), followed by the Netherlands (21%) France and Austria (both 22%). To read Deloitte's news release go to http://www2.deloitte.com/uk/en/pages/press-releases/articles/european-business-confidence-heads-south.html.

1-in-5 businesses in the UK are owed payment on overdue invoices. According to new research by R3, 21% of UK businesses are owed payment on invoices that are over 30 days past due, Manufacturing (27%) had the highest rate of businesses that were owed late payments, followed by Services (22%), and Retail and Distribution (13%). However, R3 also reported that business distress remains near record lows, with only 28% of businesses experiencing any of the key signs of business distress – including decreasing profits, sales volumes, or market shares, the regular use of maximum overdraft facilities, and new redundancies. Indicators of business growth also remain near record highs (68%), with 67% of businesses showing at least one indicator of growth. To read R3's news release go to https://www.r3.org.uk/index.cfm?page=1114&element=25843&refpage=1008.

UK business survival rates tell a positive story. The FSB has reported that the latest Office for National Statistics (ONS) Business Demography data for 2014 indicates a levelling off of improvements to business survival rates, with the rate of business births decreasing by 0.4% while the rate of business deaths fell by 0.1% between 2013 and 2014. Commenting on the numbers, John Allan, National Chairman for the Federation of Small Businesses, said: “These figures provide an interesting insight into the entrepreneurial spirit that has helped drive the recovery over the past five years. In recent years, business births have seen unprecedented levels . . . Coupled with the gradual gains in business survival rates, assisted by the improving economic outlook and a range of helpful policy measures, this has led to more than 5.4 million businesses in the UK." To read the FSB's news release go to http://www.fsb.org.uk/media-centre/press-releases/business-survival-rates-tell-a-positive-story-says-fsb.

UK growth steady but momentum has slowed. According to the latest CBI Growth Indicator, UK economic growth remained steady in the three months to November - albeit at a slower pace than a few months ago. The balance of firms reporting a rise in output was +13%, a shade below the +14% reported last month but above the long-run average of +5%. Growth was mainly driven by the business and consumer service sectors with manufacturing remaining one of the more sluggish sectors in the economy and distribution taking a hit. Expectations for the next three months are the weakest they have been for two years (+17%) although still well-above the average (+10%). To read the CBI's news release go to http://news.cbi.org.uk/news/uk-growth-steady-but-momentum-has-slowed-growth-indicator/.

‘Zombie businesses’ return to the land of the living. According to new research by R3, the number of UK businesses just paying the interest on their debts has plummeted from 154,000 in August 2014 to 69,000 now. This is the lowest number of businesses in this position since the survey began in June 2012, having peaked at 160,000 in November 2012. However, Phillip Sykes, President of R3, cautioned that 77,000 businesses say they would be unable to repay debts if interest rates increase by a one percentage point or more: “The low interest rates have been a great aid to businesses but they won’t last forever . . While the amount of businesses that would be unable to repay debts has decreased by nearly a quarter since last year, it still represents a considerable number of companies who will be put in a precarious position when a rise does come.” To read R3's news release go to https://www.r3.org.uk/index.cfm?page=1114&element=25921&refpage=1008.

UK High Street sales tumble in the run up to Christmas. BDO’s latest monthly High Street Sales Tracker (HSST), has shown just how much of a damp squib this year’s Black Friday discounting turned out to be. BDO’s (HSST) recorded a massive 4.3% drop in year-on-year sales for November - the largest fall in monthly like-for-like sales this year and the severest sales dip since November 2008. However, Sophie Michael, Head of Retail and Wholesale at BDO, said the underlying narrative was more positive for retailers. “With this month’s figures being compared to such strong growth in November 2014 (+25.6%), an overall monthly increase greater than 20% would have been a big ask. Furthermore, for Black Friday week itself, non-store sales growth was 20.1% demonstrating the relative success of online through the Black Friday period.” To read BDO's news release go to http://www.bdo.co.uk/press/high-street-sales-tumble-in-build-up-to-christmas.

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