ISSUE 73: Credit Insurance News Digest

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63% of European SMEs believe that payments are made late intentionally. A new European Payment Report from Intrum Justitia has revealed that 45% of European SMEs say that they have accepted longer payment terms than they are comfortable with and 35% claim that the request to do so came from a large multinational client. Additionally, almost two thirds (63%) claim that “intentional late payments” are among the main causes behind the delayed payments, suggesting that this problem could in large part be solved by new attitudes and guidelines. The survey also found that as 28% of the 9,440 European SMEs surveyed claim that they neither use bank guarantees, credit insurance, credit checks, pre-payment, debt collection, or factoring to protect them against bad payments (the corresponding figure for large companies is 9%), SMEs are extremely vulnerable to late payment risks. To read Intrum Justitia's news release with a link to download the report, please follow this link: http://news.cision.com/intrum-justitia-ab/r/big-companies--intentional-late-payments-put-a-brake-on-job-creation,c2019956.

Global Factoring volume reaches all time high. ABFA have reported that although the global factoring market's growth in 2015 of 1.4% was well below its seven-year trend annual growth rate of 9%, its turnover of €2,373 billion was the highest figure ever recorded. Europe, the largest factoring market worldwide, was the strongest region with a 6% volume increase to €1,557 billion (2014: €1,463 billion), mainly driven by the strategic emphasis towards factoring by the commercial banking sector which controls approximately 90% of Europe’s factoring volume. The top four European markets, UK, France, Germany and Italy, all grew last year and accounted for 66% of the region’s total. In contrast, Asia, the second largest global factoring market decreased by 8% to €562.99 billion and the Americas and Africa also suffered a decline of 6% and 13% respectively. To read ABFA's news lease go to http://www.abfa.org.uk/news/118/Global-Factoring-Volume-reaches-all-time-high.

World Bank cuts 2016 global growth forecast to 2.4%. The World Bank has advised that it is downgrading its 2016 global growth forecast to 2.4% from the 2.9% pace projected in January. The move is due to sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade, and diminishing capital flows. According to the latest update of its Global Economic Prospects report, commodity-exporting emerging market and developing economies have struggled to adapt to lower prices for oil and other key commodities, and this accounts for half of the downward revision. Growth in these economies is projected to advance at a meager 0.4% pace this year, a downward revision of 1.2 % from the January outlook. Among major emerging market economies, China is forecast to grow at 6.7% in 2016, India’s robust economic expansion is expected to hold steady at 7.6% while Brazil and Russia are projected to remain in deeper recessions than forecast in January. To read the World Bank's news release go to http://www.worldbank.org/en/news/press-release/2016/06/07/world-bank-cuts-2016-global-growth-forecast.

UK economic growth stable, but risks are clear as day. According to the latest CBI Growth Indicator, UK private sector growth was broadly steady in May, and further modest growth is expected in the months ahead. But there are clear signs that uncertainty around the global outlook and the outcome of the EU referendum are concerning businesses. Rain Newton-Smith, CBI Director of Economics, said: “While underlying conditions for the UK economy are looking pretty stable, the risks are clear as day with uncertainty still brewing over the global outlook, and the EU vote around the corner. . . Expectations for growth have slipped and are well below the levels of the last few years, with uncertainty swirling around the pace of output and the impact from risks on the horizon." To read the CBI's news release go to http://news.cbi.org.uk/news/economic-growth-stable-but-risks-are-clear-as-day/.

EU Referendum and the UK credit community. In a survey of 300 members of the UK's Chartered Institute of Credit Management (CICM) – three quarters of who conduct international trade (32%) said that they would vote to leave the EU – a rise of almost a fifth (21%) on the same period last year. A further 21% were still undecided. In addition, one in ten (11%) believe that Brexit will in fact be good news for their business, a 4.5% increase on the same period last year. Philip King, Chief Executive of the CICM, says that while the shift in opinion has been marked, almost half (47%) of CICM members are still in favour of staying as part of the union: “This means that only a small percentage of the undecided vote needs to be converted for the ‘stay’ campaign to carry the day.” To read the CICM's news release go to http://www.cicm.com/press-release-eu-referendum-credit-community/.

Optimism wanes among financial services firms for second consecutive quarter. According to the latest CBI/PwC Financial Services Survey, optimism among firms in the financial services sector fell for the second consecutive quarter in the three months to June, amid stronger competition, rising uncertainty about demand and slowing profits growth, The quarterly survey found that banks, securities traders and investment management firms were less optimistic about the general business situation than three months earlier, but sentiment in other sectors either improved or was stable. Overall business volumes continued to rise at a healthy rate, in line with expectations, and the outlook is for a similar expansion next quarter. Banking remains a notable exception, with business volumes having been broadly stable for the last year-and-a-half, and no change expected over the next quarter. To read PWC's news release go to http://pwc.blogs.com/press_room/2016/06/optimism-wanes-among-financial-services-firms-for-second-consecutive-quarter-cbipwc.html.

Only 15% of UK businesses feel well informed about the potential impact of a Brexit. New research from Grant Thornton’s International Business Report reveals that only 15% of UK business leaders feel 'well informed' about the potential impact the EU referendum could have on their business. A further 39% felt uninformed, with the remainder (46%) suggesting they were 'somewhat' informed. Those surveyed pointed to the need for more information around: the short-term impact of a vote to leave (46%), the impact on imports and exports of goods and services (36%) and the impact on tax (35%), amongst other areas. To read Grant Thornton's news release go to http://www.grantthornton.co.uk/en/news-centre/only-15-percent-of-uk-businesses-feel-well-informed-about-the-potential-impact-of-a-brexit/.

79% of UK freelancers say that cash-flow is the number one concern for their business. Latest research from Ormsby Street has shown that UK freelancers are increasingly struggling with late invoice payments, with around half admitting they have considered quitting life as a freelancer because of worries over continued late payment, and 46% stressing about having enough cash to live on. While a fortunate 19% of respondents say most of their invoices are always paid on time, a freelancer’s invoices are paid on average 18 and a half days after their due date and, at any one time, a freelancer in the UK is owed on average £5,431.03 in late payments. The Office for National Statistics revealed in 2015 that 4.55 million Britons are now their own boss. To read Ormsby Street's news release go to https://blog.ormsbystreet.com/2016/06/03/late-payment-threatens-to-derail-the-freelance-industry/.

M&A investment into the UK down 42%, but is up 107% for the rest of Europe during the first quarter of 2016. According to analysis from Deloitte, inbound UK M&A deal values decreased by 42% from US$51.4 billion in Q1 2015 to $30 billion in Q1 2016. However during the same period in the rest of Europe, M&A investment increased from $35.6 billion to $73.5 billion. A similar trend emerges by deal volumes, where the number of UK-targeted deals fell 10% to 222 in the first quarter, while for the rest of Europe inbound deal volumes increased by 4% to 384 deals. Iain Macmillan, head of global M&A at Deloitte, commented: “Our analysis shows that market uncertainties have a significant bearing on corporate confidence and the deal flow. Currently, companies are content to wait and will revaluate their plans following the outcome of the referendum vote.” To read Deloitte's news release go to http://www2.deloitte.com/uk/en/pages/press-releases/articles/m-a-investment-into-the-UK-down-42-percent.html.

Survey: How will Brexit vote affect the UK economy? The first indication of how the economy may be affected by the Brexit referendum could come from the results of Q2 2016 of the Chartered Institute of Credit Management’s Credit Managers’ Index, sponsored by Tinubu Square. The Index takes less than 5 minutes to complete and credit professionals from every business size, sector and industry are encouraged to participate making the Index comprehensive and representative. Plus: All participants will be entered into a draw to win a KINDLE FIRE HD and will receive the summary results document PRIOR to general release. The closing date for completion of this Index is midnight on Tuesday 28 June 2016. Click here for the survey.

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