Welcome to January's issue of Credit Management News Digest, our sister newsletter to  Credit Insurance News Digest. This issue is sponsored by Chubb

Late Payment & Business Distress
27,000 UK retailers are in financial distress. According to new data from Begbies Traynor, the number of UK retailers facing significant financial distress increased to nearly 27,000 during Q4 2019, with distress amongst online retailers rising to more than 9,000 - an increase of 65% over the past three years. The research also found that 97 'general retailers' are in critical financial distress – often a precursor to formal insolvency. Julie Palmer, Regional Managing Partner at Begbies Traynor, commented: "Looking to 2020, it seems as if the accelerating numbers of online retailers in distress will continue." To read Begbies Traynor's news release go to https://www.begbies-traynorgroup.com/news/commentary/retailers-feel-a-chill-as-27000-in-financial-distress.
UK Late payments doubled from 12 days in 2018 to 23 days in 2019. New research by MarketFinance indicates that although UK businesses typically agree 45-day payment terms from completion of work or delivery of goods, 39% of invoices issued in 2019 (worth over £34 billion) were paid late. Although this is a 4% improvement on 2018's figures, it appears that the number of days an invoice was paid late in 2019 has almost doubled - to 23 days from 12 days in 2018. In addition, invoices paid late in 2019 were typically larger in value (£34,286) than those paid on time (£24,624). Overall, professional and legal services businesses suffered the most with late payment, with 70% of invoices being paid late in 2019 - up from 30% in 2018. To read MarketFinance's news release go to https://blog.marketfinance.com/2019/12/09/uk-smes-stretched-further-by-late-payments/.
UK SMEs are chasing £50 billion in late payments. New research from digital banking firm Tide has revealed that UK SMEs are chasing more than £50 billion worth of late payments, with the average SME chasing five outstanding invoices at any one time. This amounts to an average of £8,500 being owed and 1.5 hours per day – or almost 900,000 hours in total per day – being used. The research also found that the self-employed have an average of four outstanding invoices at any one time, amounting to almost £1,000, and spend one hour per day chasing up these invoices. Businesses with between 10 and 50 employees have an average of 7.5 invoices outstanding, amounting to over £13,000 being owed. To read Tide's news release go to https://www.tide.co/blog/tide-update/new-research-uk-smes-chasing-50bn-in-late-payments/.
37% of UK small business owners have had to stop paying themselves as a result of poor debtor practices. According to a survey from engineering trade bodies ECA and BESA, 47% of UK small business owners and managing directors have had to stop their own pay due to the impact of unfair payment practices by their buyers. Overall, three-quarters of business owners said they had made sacrifices, including reducing their salary and cancelling company training and learning activity. In addition, 36% say they have struggled to pay business taxes due to payment issues, and 7% were forced to pay their staff late. To read BESA's news release go to https://www.thebesa.com/news/survey-business-owners-forced-to-stop-paying-employees-due-to-late-payment/.
Accounting practices drive a stream of company profit warnings. New research from InfolinkGazette has indicated that 2019 was a year of "questionable accounting practices" (including notable names: M&C Saatchi, Ted Baker, Goals Soccer Centres, Aggregated Micro Power Holdings, and Eddie Stobart Logistics) which has resulted in a stream of quoted company profit warnings casting doubt on many businesses presumed to be low risk. InfolinkGazette reports that in M&C Saatchi's case, questionable accounting decisions date back to 2014 but have most recently resulted in PwC finding that the Company will make need to make adjustments of £11.6 million to its results. Ted Baker also recently revealed a £20-25 million hole in its balance sheet, which will likely result in its 4th profit warning in less than a year. To read InfolinkGazette's news release go to https://www.infolinkgazette.com/?pid=6
UK Economy & Brexit
UK economy in stagnation as service sector slows. The British Chambers of Commerce's (BCC) latest quarterly economic survey has reported protracted weakness across most indicators of UK economic health in the final quarter of 2019. The service sector, which accounts for almost 80% of UK economic output, saw all its key indicators worsen compared to Q3 2019. These indicators remain well below their historic average. The balance of manufacturers reporting a rise in domestic and export sales improved slightly. However, the balance of manufacturers reporting increased export and domestic orders has now been negative for two consecutive quarters. The last time this happened was in 2011. To read the BCC's news release go to https://www.britishchambers.org.uk/news/2020/01/bcc-quarterly-economic-survey-q4-2019-uk-economy-in-stasis-as-service-sector-slows.  
The UK economy continues to show signs of slowing. A revised estimate from the Office of National Statistics (ONS) has revealed that UK GDP grew by 0.4% in Q3 2019. Although this was slightly higher than the expected 0.3% growth previously predicted, the ONS cautioned that underlying momentum in the UK economy is continuing to show some signs of slowing. The ONS now estimates that UK GDP increased by 1.3% between 2017 and 2018, 0.1% less than its previous estimate and 0.6% lower than the growth seen between 2016 and 2017. Compared with the same quarter a year ago, the UK economy has grown by 1.1%. To see the ONS' latest figures go to https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/quarterlynationalaccounts/julytoseptember2019.
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The UK economy is forecast to become a fifth larger than France by 2034. The Centre for Economics and Business Research (CEBR) has published its World Economic League Table (WELT) for 2020 and has noted that the UK was overtaken by India in 2019 to become the sixth-largest economy in the world. Nevertheless, the report notes that despite the falls in the currency associated with Brexit, the UK economy has remained larger than the French economy, and by 2034 is forecast to be a fifth larger than France compared with roughly the same size in 2018/19 and will be slowly catching up with Germany in size. To read CEBR's news release, with a link to the full report, go to https://cebr.com/reports/world-economic-league-table-2020/.
Small UK businesses confidence plunged to an eight-year low on the eve of the general election. According to the FSB’s latest Small Business Index (SBI), the UK’s small business community headed into the general election gripped by pessimism. The SBI confidence measure stood at -21.6 in Q4 - an unprecedented sixth straight negative reading and the lowest quarterly figure since the same period in 2011 when the UK was mid-way through the recession. Furthermore, the FSB found that 46% of small firms overall expect their performance to worsen over the coming three months, and 66% of small firms in the retail sector expect prospects to worsen next quarter. To read the FSB's news release go to https://www.fsb.org.uk/resources-page/small-businesses-hope-that-night-is-darkest-before-the-dawn-as-confidence-plunges-to-eight-year-low-on-eve-of-election.html.
UK Trade Sectors & Exports
2019 was the worst year on record for UK retail. Latest research from the British Retail Consortium (BRC) has indicated that total retail sales for 2019 decreased by 0.1%, compared with 1.2% growth in 2018. This makes 2019 the worst year on record for UK retail. Helen Dickinson OBE, Chief Executive of BRC, commented: “2019 was the worst year on record and the first year to show an overall decline in retail sales. This was also reflected in the CVAs, shop closures and job losses that the industry suffered in 2019." To read the BRC's news release go to https://brc.org.uk/news/2019/worst-year-on-record-for-retail/.
A two-speed economy in UK manufacturing performance. According to the latest Regional Manufacturing Outlook survey for Q4 2019 published by Make UK and BDO, the average balance for total orders across the UK in Q4 was +6% compared to +21% in London and the South East. The regional difference was even starker for domestic orders, +30% compared to a national average of -5%, and for export orders, +39% compared to +10%. The survey also showed that the West Midlands, in particular, is suffering acutely from the problems in the automotive sector, with all six of the survey indicators in negative territory and the balances in total orders and output showing the biggest declines in the UK. To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2019/bdo-survey-shows-manufacturing-performance-diverging-across-the-uk.
UK manufacturers report that output is declining at a pace not seen since the financial crisis. According to the latest data from the CBI, UK manufacturers' total order books remained weak in December 2019 and export order books worsened compared to November. Both total and export order books remain below their long-run averages. Furthermore, output volumes in the three months to December fell at the quickest rate since the financial crisis (Sep 2009), with output expanding in only 6 out of 17 sub-sectors. Tom Crotty, Group Director, INEOS and Chair of the CBI Manufacturing Council, said: “These disappointing figures are reflective of the widespread weakness in the global manufacturing sector and the impact of continued Brexit uncertainty in the run-up to the General Election." To read the CBI's news release go to https://www.cbi.org.uk/media-centre/articles/uk-manufacturing-sector-finishes-the-year-on-a-low-note-cbi/.
The UK's food and drink sector continues to forge ahead at home and abroad. According to a new report published by Make UK and Santander, Britain’s food and drink sector is forging ahead at home and overseas. The report notes that the industry is now worth 15.9% of total manufacturing GVA, with sales in 2018 of £85.6 billion - 7.6% more than in 2016. The report also shows that a significant element of this growth is coming from overseas with sales abroad up by just under one quarter in the last two years alone. The EU remains the biggest total market accounting for 61% of exports worth £13.9 billion, with Ireland the largest single destination (21.4% worth £4.2 billion) closely followed by The Netherlands, France, the USA and Germany. However, the rest of the World is seeing significant growth with sales to Asia & Oceania and the US up by 295% and 260% respectively in the last twenty years. To read Make's news release go to https://www.makeuk.org/news-and-events/news/2020/01/07/food-and-drink-sector-enjoys-plenty-of-festive-cheer.
An increase in the number of large UK retailers entering into administration in 2019. New research by Deloitte has revealed a total of 124 UK retail administrations in 2019 (just one less than in 2018) of which, 28 were large retailers. Dan Butters, partner and head of restructuring services at Deloitte, said: “2019 has proven to be another challenging year for retailers. Whilst the number of retail administrations has remained broadly flat on 2018, we have seen an increase in the number of large retailers entering into administration this year."  To read Deloitte's news release go to https://www2.deloitte.com/uk/en/pages/press-releases/articles/retail-sector-ends-decade-with-fall-in-the-number-of-cvas-whilst-administrations-increase-57-percent-in-december.html
Statistics on UK-EU trade. According to a recent House of Commons Briefing Paper (December 2019), the EU, taken as a whole is the UK’s largest trading partner. In 2018, UK exports to the EU were £291 billion (45% of all UK exports), while UK imports from the EU were £357 billion (53% of all UK imports). However, the research also shows that the share of UK exports accounted for by the EU has fallen over time - from 55% in 2006 to 45% in 2018, while the share of UK imports from the EU fell from 58% in 2002 to 53% in 2018. Financial services and other business services (a category which includes legal, accounting, advertising, research and development, architectural, engineering and other professional and technical services) made up just over half of UK service exports to the EU. For more information go to https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06152.
UK & Ireland Business Demography
2019 saw a small increase in the number of businesses in the UK. According to a recent House of Commons Briefing Paper (December 2019), there were 5.9 million business in the UK in 2019 - 200,000 more than in 2018. Of these, over 99% are classified as SMEs (employing 0-249 people) and 5.6 million (96%) businesses are micro-businesses (employing 0-9 people). While there are only 8,000 large businesses (employing over 250 people) in the UK, these businesses account for 48% of turnover. In 2019, there were 1.1 million businesses in London, the most of any region or country in the UK. Overall, the service industries account for 74% of businesses and 71% of turnover, the retail industry accounts for 9% of businesses and 34% of turnover, and the manufacturing sector accounts for 5% of businesses and 15% of turnover. To see the Briefing Paper go to https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06152
More than 22,000 new businesses opened in Ireland in 2017. According to Ireland's Central Statistics Office, more than 22,000 new businesses opened in Ireland in 2017. 99.8% of these were SMEs, and 92.1% were micro-enterprises with less than ten employees. Large enterprises accounted for just 0.2% of all businesses. The construction sector had the largest number of active enterprises (57,255 enterprises active), while retail trade accounted for the largest number of persons employed (over 225,000). Overall, Ireland's business economy was worth €729.5 billion in 2017. To read the CSO's detailed statistics go to https://www.cso.ie/en/releasesandpublications/ep/p-bii/businessinireland2017/.
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Global Economic Growth
The US is set to remain the world’s largest economy throughout the 2020s. The Centre for Economics and Business Research (CEBR) has published its World Economic League Table (WELT) for 2020. This issue notes that in 2019 the US accounted for 24.8% of world GDP (its largest share of the world economy since 2007), is now expected to remain the world’s largest economy throughout the 2020s and be overtaken by China only in 2033 - three years later than CEBR previously forecast. CEBR also notes that India has now decisively overtaken both France and the UK to become the world’s fifth-largest economy in 2019. To access the WELT go to https://cebr.com/reports/world-economic-league-table-2020/.
Asia will have the world's largest GDP in 2020. The World Economic Forum (WEF) has reported that in 2020 Asia’s GDP is set to overtake the GDP of the rest of the world combined, and that by 2030 the region will contribute roughly 60% of global growth; the bulk coming from the developing markets of China and India. The WEF also predicts the continued emergence of Asian multinational corporations – Huawei in technology, DBS in Banking, Unicharm and Kao in personal care; and Suntory, Universal Robina and Indofood in F&B to name a few. To read WEF's news release go to https://www.weforum.org/agenda/2019/12/asia-economic-growth/.
The global economy is expected to grow at a modest pace in 2020. New research from PwC has predicted that the global economy will grow at a modest pace in 2020 (at a rate of around 3.2% in purchasing power parity terms), with all of the major economies to grow anticipated to see some degree of growth. US economic activity is likely to expand by around 2% in 2020, while the Eurozone will grow at approximately half that rate. In the emerging world, PwC expects the Chinese economy to expand by less than 6%, and the world’s six other largest emerging economies, including Turkey, should also grow  - with India leading the way. To read PwC's news release go to https://www.pwc.com/gx/en/issues/economy/global-economy-watch/predictions-2020.html.  
Recommended Business Apps and  Credit Management Training
Tripit. The Tripit software and app allows frequent business travelers to manage a master itinerary of travel. Once users have forwarded their confirmation emails for flights and hotel bookings to Tripit, Tripit automatically creates a master itinerary that can be easily shared to managers, colleagues or family. Tripit users are also provided with updates on the status of their flights, allowing them to check for delays or even find better seats. It also corrals weather forecasts, maps, and directions. To sign up for Tripit go to https://www.tripit.com/uhp/features or visit the app store.
Square Point of Sale. Square Point of Sale allows you to turn any iPhone, iPad or major Android device into a mobile POS that accepts credit and debit cards (including contactless cards) and mobile payments like Apple Pay. The Square Point of Sale app is free to download, card readers are £39+VAT and payment processing fees are 1.75% of each transaction for all major credit cards. Additional capabilities include online sales reports, inventory and digital receipts. For more information go to https://squareup.com/shop/hardware/gb/en or visit the app store.
Late Payment Calculator is a useful free app from Safe Collections which is designed to encourage prompt payment by UK companies. Enter the invoice value, day it became overdue and the app gives you a complete breakdown of both the fixed costs and interest payable on any unpaid invoice. The app holds no logs and requires no special permissions. Download from the App Store or Google Play.
Level 4 Diploma Course in Credit Management. CMT (Credit Management Training Ltd) has announced that its next level 4 diploma courses (five days on a one day a week basis), will commence on 10 March in Birmingham, 11 March in Manchester and 12 March in London. Topics covered include Understanding Credit Management, Managing Commercial Credit Risk, Powerful Collection Techniques, Legal Action and Insolvency, Export Overview and Developing Management Skills. There is an exam at the end of the course, and successful candidates will receive a Diploma – Pass, Merit or Distinction - and will qualify to use designated letters, CMT Dip after their name. For more information go to https://www.cmtltd.co.uk/level-4-diploma-course.
Advanced Diploma in Credit & Collections Management (Level 5). CICM's Advanced Diploma covers Strategic Planning, Compliance with legal, regulatory, ethical & social requirements, Advanced Credit Risk Management, Process Improvement, Strategic Communications & Leadership and Legal Proceedings & Insolvency. Additionally, the Advanced Diploma gives eligibility to Graduate Membership of the Chartered Institute of Credit Management and the right to use the professional letters MCICM(Grad). The qualification is aimed at credit controllers, analysts, department managers or team leaders who would like to move to more senior roles or experienced credit managers who need to consolidate their experience with qualifications. It usually takes around two years to complete and is regulated by Ofqual. For more information go to https://qualifications.cicm.com/explore/credit-management/level-5-diploma-mcicm/.
News Quiz 
We are delighted to launch January's News Quiz.
Just six short questions (all answers can be found in this issue and Credit Insurance News Digest, with the chance to win a £15 Amazon gift card or equivalent donation to the charity of your choice.
We will announce our next winner in the next issue on 12 February.
Click here to take part.
Events & Offers
Supply Chain Finance Summit, 30-31 January 2020. Amsterdam
The fifth annual Supply Chain Finance Summit is a great opportunity to learn about the latest trends, ideas and developments transforming working capital and supply chain management, as well as a chance to network with leaders in the industry.
This in-depth event tracks the transformation of supply chain finance (SCF); showcasing the latest innovations within the industry for both domestic and cross-border financing, examining the future of technology-enabled supply chain models, and driving the conversation on increasing access of SCF for SMEs and emerging markets.
As event partners, Credit Insurance News can offer their members a 10% discount on a delegate pass rate. To register please follow this link https://bcrpub.com/events/supply-chain-finance-summit-1.
The Credit Insurance News delegate discount code is CIN20– please utilise the code upon booking. Alternatively you can contact yongmei.he@bcrpub.com quoting your discount code for payment via invoice.
About the Sponsor: Chubb
Chubb Global Markets (CGM) is the London Market wholesale and specialty division of Chubb European Group, part of Chubb Group - the world’s largest publicly traded property and casualty insurer.
CGM has twenty years' experience in underwriting Excess of Loss trade credit policies, providing non- cancellable cover to companies with well-established credit management procedures, offering certainty during uncertain political and economic times.
CGM’s trade credit underwriters are experienced in all aspects of the client relationship ensuring a single point of contact and quick decisions.
Chubb’s core political risk and credit underwriting expertise and its ability to provide bespoke wordings deliver a flexible underwriting approach to meet the changing needs of clients.
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