Welcome to the January 2023 issue of Credit Management News Digest. 
This month's issue is sponsored by Nexus Trade Credit.

Index
 
UK and Ireland: Late Payment & Insolvencies
Big UK firms must be penalised appropriately for late payment. Purbeck Personal Guarantee Insurance has welcomed the UK Government's review into the late payment practices of big firms but is calling for tougher measures. Recent research by the personal guarantee insurance provider found that rather than planning for growth, 52% of small firms are just focused on 'keeping on an even keel' in the year ahead. The East Midlands is the worst impacted, with just 28% of small firms planning for growth in the East Midlands compared to 43% in the South East and 40% in London and East Anglia. Todd Davison, MD of Purbeck Personal Guarantee Insurance, said: Big firms need to find more ethical ways of managing their own cashflows rather than taking the easy route of delaying payment to the time it suits them, rather than the time stipulated by their supplier." To read Purbeck's news release go to https://www.purbeckinsurance.co.uk/blog/late-payment-problems-for-smes.
Only 5% of UK companies receive a 'Fast Payer Award'. Good Business Pays has revealed the 270 companies to be awarded its 2022 ‘Fast Payer Award’, which recognises those who have demonstrated the best payment performance to their suppliers over the past year. The winners cover almost all industry sectors and regions of the UK. Previous data from Good Business Pays showed that FTSE 350 companies are taking on average 37 days to pay their suppliers — with well-known companies such as Diageo, Coca Cola and Rolls Royce amongst the slowest to settle invoices. Terry Corby, CEO of Good Business Pays CIC commented: "At a time when we are seeing a big reduction in the number of companies reporting of their payment terms, it's heartening to see there are still good businesses like those in our Fast-Payer list. These companies are paying their bills fast and on time. They are key to helping ensure the health of our small business economy." To see the full list of Fast Paying companies, visit Fast Payer Awards 2022, Good Business Pays at https://goodbusinesspays.com/fast-payer-awards-2022/.
UK construction sector insolvencies hit a record high. Company Rescue has reported that the latest data from the Insolvency Service, indicates that businesses within the construction sector are going bust at the fastest rate in a decade. As a result, the number of company insolvencies overall is being driven to a 13-year high. Data found that for the first half of the year there were 10,717 company insolvencies — of which the construction sector accounted for a fifth (2,094 insolvencies). When analysed more closely, in just the first quarter the construction sector reached 1,048 insolvencies. This marks the highest level since the same quarter of 2012. For the second quarter, numbers reached its highest since Q3 of 2009. Construction firms, which make up 7% of the UK economy, are being hit by rising material costs, staff shortages and falling consumer demand. To read Company Rescue's news release go to https://www.companyrescue.co.uk/guides-knowledge/news/construction-sector-insolvencies-hit-a-record-high-4834/.
UK corporate insolvencies were 34.8% higher in November compared to the same month in 2019. The latest data from the Insolvency Service has found that UK corporate insolvencies increased by 4.2% in November 2022 to a total of 2,029 compared to October's total of 1,948, and increased by 34.8% compared to November 2019’s total of 1,505. The rise in corporate insolvency numbers was mainly driven by an increase in Compulsory Liquidations, while Creditor Voluntary Liquidations (CVLS) and Administration numbers have also increased. Christina Fitzgerald, President of R3, commented: "What we're seeing here is a perfect storm of creditors pursuing unpaid debts and directors choosing to close down their businesses — either before this choice is taken away from them or because they have simply run out of road." To read R3's news release go to https://www.r3.org.uk/press-policy-and-research/news/more/31456/page/1//.
UK Economy 
The UK economy shrank by more than first thought in Q3. According to the latest data released by the Office for National Statistics (ONS), UK GDP is estimated to have fallen by a revised 0.3% in Quarter 3 2022 compared with a previous estimate of 0.2%. The ONS also said the UK economy grew less than first estimated in the first half of the year — expanding by 0.6% in the first quarter and 0.1% in the second quarter. The ONS has previously said growth stood at 0.7% and 0.2% in those quarters respectively. Furthermore, despite an upward revision to annual growth in 2021, downward revisions across the quarters of 2022 mean that GDP is now estimated to be 0.8% below its COVID-19 pandemic level, revised from the ONS' previous estimate of being 0.4% below. To read the ONS' news release go to https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/quarterlynationalaccounts/julytoseptember2022.
The impact of Brexit on the UK economy. The Center for European Reform (CER) has estimated that Brexit had reduced the UK's GDP by 5.5% by the second quarter of 2022. John Springford, Deputy Director of the Centre for European Reform, noted that this estimate is based on the 'doppelgänger' method, in which an algorithm selects countries whose economic performance closely matches the UK's before Brexit. The CER's research also indicates that, as shortfalls in GDP and investment are around the same as the estimates for Q4 2021, the impact of COVID-19 is not substantively affecting the results. To read the CER's report go to https://www.cer.eu/insights/cost-brexit-june-2022.
71% of UK businesses are ready for a recession. Recent research by RSM UK suggests almost three-quarters (71%) of UK businesses are feeling resilient despite the exceptionally tough economic outlook. However, while businesses seem confident in their ability to navigate the economic headwinds, RSM’s research showed that 44% now feel rising energy prices present their biggest risk, while increased cost of finance and rising staffing costs are equally viewed as their second biggest. Supply chain disruption also continues to be considered a threat by 28% of businesses. The research also showed that although many UK businesses are looking to access finance to weather the recessionary storm ahead or maximise opportunities such as acquisitions of struggling companies, more than a quarter want to access finance to address concerns over breaking exiting covenants, suggesting they are at risk of defaulting on their financing obligations. To read RSM UK's news release go to https://www.rsmuk.com/news/the-real-economy-71-percent-of-businesses-ready-for-recession.
The UK economy is set to experience the deepest recession amongst large economies. According to Allianz Trade, the UK economy is forecast to fall into a recession in 2023, before finding a weak recovery of 0.7% in 2024. Allianz Trade predicts that the UK economy will shrink by -0.9% in 2023 — the deepest recession amongst large economies — compared to just -0.3% for the USA, and -0.4% across the Eurozone. In comparison, global GDP will grow by +1.9%. Furthermore, Allianz Trade notes that, along with Spain, the UK is leading the rebound in business insolvencies in Europe, with business insolvencies expected to increase by +51% in 2022, and by +15% in 2023. "The climb in insolvencies is driven by a sharp increase in liquidations, suggesting that businesses which were struggling either before or during pandemic lockdowns have simply chosen to close rather than attempt to restructure or sell," said Maxime Darmet, Senior Economist, France the US and UK, Allianz Trade. Click here to read Allianz Trade's news release.
UK Business Confidence & Trade Sectors
No Signs of UK business recovery.  The BCC’s Quarterly Economic Survey (QES) for Q4 2022 shows key UK economic indicators have stabilised at concerningly low levels, following significant declines in Q3. The survey of over 5,600 UK firms — 92% of whom are SMEs — reveals that only 33% of firms experienced an increase in sales over the past three months, while 25% of firms reported a decrease in sales and 42% report no change. Activity in the retail and hospitality sectors remains particularly weak. Both sectors are firmly in 'negative territory', with more firms reporting a decrease in sales than an increase over the past three months. The hospitality sector is also struggling to operate at full capacity; three quarters (74%) of hospitality businesses reported they are operating below capacity. In addition, only 24% of business said their cash flow has increased over the last three months, while 30% have seen it decrease. To read the BCC's news release go to https://www.britishchambers.org.uk/news/2023/01/no-signs-of-business-recovery-bcc-quarterly-economic-survey-q4-2022.
BRC forecasts low UK sales growth for 2023 overall, with some cause for optimism in the second half of the year. A new analysis by the British Retail Consortium (BRC) suggests that UK retail sales will pick up in the second half of 2023 as inflation slows and consumer confidence improves, with growth of 3.6% to 4.7% compared with 1% to 2.3% in the first half. The analysis also suggests that although food sales growth will fall slightly in the second half of the year, this will be at a slower rate than the anticipated decline in food inflation, meaning falls in volumes will ease over the period. Kris Hamer, Director of Insight, at the BRC, commented that the first half of the year is likely to challenging for households and retailers but "there is cause for optimism in the second half of 2023, when we expect inflation to ease and improving consumer confidence to result in an improvement to sales growth, and corresponding volumes." To read the BRC's news release go to https://brc.org.uk/news/corporate-affairs/brc-forecast-low-sales-growth-for-2023.
UK private sector activity has fallen for five consecutive rolling quarters. UK private sector activity continued to fall in the three months to December (balance of -13%), at a slightly faster pace than in the previous month (-7%), according to the CBI's latest Growth Indicator. Private sector activity has now fallen for five consecutive rolling quarters. The faster fall in December was largely due to an accelerated decline in consumer services volumes (-54% from -32% in November), and manufacturing output falling slightly (-9%) after a brief return to growth in November (+18%). Distribution sales also saw a slower decline (-12% from -23% in November) while business and professional services remained stagnant (-1%) for the second successive survey. Martin Sartorius, Principal Economist at the CBI, commented: "The decline in private sector activity over December extends a downward trend that looks set to deepen going into 2023." To read the CBI's news release go to https://www.cbi.org.uk/media-centre/articles/private-sector-activity-has-fallen-for-five-consecutive-rolling-quarters-cbi-growth-indicator/.
Despite depressing economic forecasts, UK mid-market business leaders are surprisingly optimistic about their growth opportunities. According to data from Grant Thornton UK LLP’s latest Business Outlook Tracker, UK mid-market optimism has rebounded across all indicators monitored. The results indicate that UK businesses are confident they can weather this economic downturn: optimism regarding their funding position has risen +23% since October — the highest level recorded since August 2021 — and almost two-thirds (64%) are also confident that they have sufficient working capital to manage the impact of a recession for six months or more. The top concerns for the mid-market heading into 2023 are the rising tax burden and rising interest rates, both of which they feel sufficiently prepared to manage. To read Grant Thornton's news release go to https://www.grantthornton.co.uk/news-centre/gloomy-economic-forecasts-fail-to-dampen-mid-market-christmas-cheer/.
UK retail health continues its slow decline. The health of the UK retail sector continued to decline in the final few months of 2022, as the golden quarter failed to deliver a festive boost for retailers, according to the latest assessment by KPMG/Ipsos Retail Think Tank (RTT) members. According to the RTT, the health of the retail sector fell by a further two points in Q4 22 putting the latest Retail Health Index at 71 points in the final quarter of this year — a drop in Christmas trading not seen since 2011. The fall in demand during the golden quarter makes it one of the most challenging Christmases in recent times and was more severe than the two golden quarters of 2021 and 2020 where consumers were confined by COVID restrictions. Commenting on the quarter, Paul Martin, UK Head of Retail at KPMG said: "It will be yet another tough year for retail and a case of survival of the fittest, but we expect to see demand increase as 2023 progresses." To read KPMG's news release go to https://home.kpmg/uk/en/home/media/press-releases/2022/12/retail-health-declines.html.
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Global Economy
An unprecedented mix of challenges is bringing the global economy to the brink of recession. Atradius' latest Economic Outlook expects global GDP growth to decrease to 1.2% in 2023, down from 2.9% in 2022 and anticipates that several key advanced markets — the US, the UK and the eurozone — will fall into recession in 2023. In the Eurozone, GDP growth is predicted to contract by 0.1% in 2023 after a 3.1% increase in 2022. The UK is expected to see a 0.7% economic contraction in 2023, followed by a modest 1.8% rebound in 2024. In the US, after a 1.8% growth rate in 2022, Atradius expects a 0.4% contraction in 2023. However, Atradius also warns that further energy price shocks, next to a vicious wage-price spiral in advanced economies, would lead to a deeper global recession. In such a scenario, Atradius expects global growth to halve in 2023 (to 0.6%) and warns that this would shave 2.3% off GDP in the US and 1.5% in the eurozone in 2023. To read Atradius Economic Outlook go to https://group.atradius.com/publications/economic-research/economic-outlook-december-2022.html.
The confluence of crises that defined 2022 continue to hamper global growth. The World Bank has published a series on nine charts to provide an overview of 2022, including a growth chart that indicates that the global economy is now in its steepest slowdown since 1970 — with global consumer confidence already suffering a much sharper decline than during the run-up to previous global recessions. The analysis also notes that the world’s three largest economies — the US, China, and the euro area—have been sharply slowing, and cautions that under the circumstances, even a moderate hit to the global economy over the next year could tip it into recession. To see the World Ban's chart for growth go to https://www.worldbank.org/en/news/immersive-story/2022/12/15/2022-in-nine-charts?intcid=ecr_hp_headerB_en_ext#group-section-Growth-GEiBSGjgiH.
Global growth: Still headed towards a recession. In its Economic Outlook 23-24: Keep calm and carry on, Allianz Trade anticipates global GDP growth will slow to +1.4% in 2023 (from +2.9% in 2022) and recover modestly to +2.8% in 2024. However, there will be significant divergence across countries, with advanced economies registering a shallow recession of -0.1% in 2023 (after growth of +2.5% in 2022), followed by a rebound to below-potential growth of +1.5% in 2024. In contrast, growth in emerging markets is expected to remain stable in 2023 at +3.3% — mainly supported by the cautious reopening of China, with a rebound to +4.3% growth expected in 2024. In 2023, Allianz also expects global trade in goods and services to grow by only +0.7% in volume terms and contract by -1.3% in value terms (to USD 29.5 trillion). However, a mild recovery should be possible in 2024, with global trade in goods and services growing by +3.6% in volume terms. To read Allianz Trade's report go to https://www.allianz-trade.com/content/dam/onemarketing/aztrade/allianz-trade_com/en_gl/erd/publications/pdf/2022_12_15_Economic-Outlook.pdf.

Credit Management Tools
Events & Professional Development
9th Annual Supply Chain Finance Summit, 24-25 January 2023. Madrid.
Growth in supply chain finance has been ongoing for over a decade with the pace accelerating in the past two years and showing no sign of slowing. With ESG, digitalisation and blockchain, the industry is now ushering a new stage of development. These developments are poised to aid reduction of the USD1.7tn trade finance gap, now at an all-time high. In the coming years supply chain finance will be a focus of growth for not only major global banks but also for those in emerging markets.
We are delighted to join our media-partners @BCR and @FCI for the 9th Annual Supply Chain Finance Summit on 24-25th January in Madrid to hear from industry experts to discuss the challenges of creating resilient, sustainable and harmonised payables finance solutions, which form the basis of the future of supply chain financing.
To register for an Early Bird discount please follow: https://bcrpub.com/events/9th-annual-supply-chain-finance-summit.
Credit Insurance News readers can get 20% discount with code: MEDIA-20.
STECIS, the Trade Credit Insurance & Surety Academy endorsed by ICISA, offers a range of webinars and classroom training courses.
The webinars on Trade Credit Insurance and Surety are organised multiple times per year. For 2023 the new range of Classroom courses are planned as well: 
  • 14 & 15 February 2023: Trade Credit Insurance Foundation Course
  • 16 & 17 February 2023: Trade Credit Insurance Advanced Course
  • 14 & 15 February 2023: Surety Foundation Course 
  • 16 & 17 February 2023: Surety Advanced Course
All classroom courses will take place in the Steigenberger Airport hotel close to Schiphol Airport/Amsterdam the Netherlands. The courses include the lunches and a dinner at the end of the first training day.
The courses are hosted by seasoned expert from the industry and there is enough opportunity for posing questions, discussions and networking.
Also there is the possibility to arrange an inhouse training: then there will be created a tailor made outline for your staff on basis the training demand of your of your company. The training will be effected at your own offices or at a venue of choice.
Details information about the webinar and classroom training courses are available on the Stecis’ website: www.stecis.org also further information can be obtained by sending an e-mail to info@stecis.org.
About this month's sponsor: Nexus Trade Credit
Nexus Trade Credit protects businesses against losses from non-payment of a commercial trade debt. Our clients range from manufacturers, subcontractors and service providers to importers and exporters. We aim to provide certainty of coverage to enable our clients to trade confidently at home or overseas. Whether you are new to trade credit insurance or a long-standing client, we go the extra mile to support your growth and provide peace of mind.
Our team of specialists offer a variety of structures to suit the risk appetite and needs of the client. We also offer a range of enhanced coverage including, for example, applications by sub-contractors, pre-delivery costs incurred by manufacturers and timesheets used by labour providers.
We currently operate from offices in the UK, Germany, Netherlands, France, and the USA — specialising in Whole Turnover, Non-Cancellable Cover, and, offer cover on a Top-Up and Key Buyer basis. We closely work with our clients and ensure that they always have direct access to the decision maker on their policy.
In addition, we provide products that enhance companies’ credit management including First Limit, a service offering real-time credit opinions and 24/7 monitoring and First Place, a highly regarded debt collection service in partnership with STA International which is reinforced by further policy enhancements.
To contact us, or, to find out more information about our services, visit our website: www.nexusunderwriting.com/en-gb/products/trade-credit-insurance.
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