Welcome to the May 2023 issue of Credit Management News Digest. 
This month's issue is sponsored by SCHUMANN.

UK & Ireland Late Payment & Insolvencies
Profit warnings from UK-listed companies remain above average for the fifth consecutive quarter. According to EY-Parthenon's latest Profit Warnings report, UK-listed companies issued 75 profit warnings between January and March 2023, the highest first-quarter total since the early stages of the pandemic in 2020. Quarterly profit warnings have now remained above the 10-year quarterly average (excluding 2020) for five consecutive quarters. Persistent economic uncertainty has played a significant role in many of these profit warnings. 35% of profit warnings cited delayed, reviewed, or cancelled contracts — up from 21% in the same period in 2022. The report also found that of the 31 companies that have issued three warnings since the start of 2022, 29% have since delisted or are in the process of being sold. This marks a greater-than-average market dropout rate, as typically just one-in-five companies delist within a year of their third warning, most due to insolvency. To read EY's news release go to https://www.ey.com/en_uk/news/2023/04/ey-uk-profit-warnings-q1-2023.
Late payments cause 7 in 10 UK businesses to worry about cashflow. Data from Time Finance has indicated that 75% of UK small businesses worry about cashflow as a direct result of overdue invoices from their customers. In a recent survey into the worsening challenge of late payments, Time Finance found that chasing payments was damaging customer relationships for 17% of businesses, while 8% said the lack of essential working capital meant they were unable to afford key investments. 100% of SMEs now claim that more of their customers are paying late due to increased overheads across the board. Phil Chesham, Managing Director of Invoice Finance at Time Finance, commented: "Our research found that SMEs are owed on average £250,000 in outstanding invoices, and it's no surprise that this is causing repercussions. This challenge simply isn't sustainable for businesses." To read Time Finance's news release go to https://timefinance.com/press-releases/late-payments-cause-7-in-10-businesses-to-worry-about-cashflow.
Allianz Trade predicts a prolonged increase in UK insolvencies for the next two years. Allianz Trade has warned that insolvencies in the UK are expected to increase by 16% (+3,930 insolvencies) and 9% (+2,600) in 2023 and 2024 as businesses are tested by weak demand, prolonged pressure on profitability, weaker cash buffers and tighter-for-longer financial conditions. Allianz Trade's report notes that UK insolvencies quickly bounced back in the UK after the phasing-out of state support measures — increasing by 4% in 2021 and 51% (24,565 bankruptcies) across all sectors in 2022. Allianz Trade expects UK business insolvencies to continue to exceed the pre-pandemic level, gradually closing the gap with 2011 highs by 2024 (to 31,100 cases), albeit still below the 2009 records. To read Allianz Trade's news release go to https://www.allianz-trade.com/en_GB/newsroom/allianz-trade-insolvency-report.html.
Corporate insolvency figures in Q1 2023 were nearly 143% higher than in Q1 2021. Latest statistics from the Insolvency Service have indicated that there were 5,747 seasonally adjusted corporate insolvencies in England and Wales in Q1 2023 — a 3.7% fall compared to Q4 2022's total of 5969. Corporate insolvency levels for Q1 2023 were 17.7% higher than Q1 2022's figures of 4,884, 142.7% higher than Q1 2021's total of 2,368, and 36.9% higher than Q1 2019's total of 4,199.
In addition, corporate insolvencies in England and Wales increased by 37.7% in March 2023 to a total of 2,457 (compared to February's total of 1,784) and by 15.9% compared to March 2022's figure of 2,120. This was an increase of 145.9% from March 2021's total of 999 and by 99.3% from March 2020's total of 1,233. Corporate insolvencies also increased by 55.4% compared to pre-pandemic levels in March 2019 (1,581). To read the Insolvency Service's news release go to https://www.gov.uk/government/statistics/company-insolvency-statistics-january-to-march-2023.
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Payment performance in the UK's food service sector is forecast to slow in 2023 while the number of business failures will rise. A new report by Tokio Marine HCC has warned that many of the challenges faced by the UK's food service sector in 2022 are likely to persist in 2023. Current food price inflation is at its highest rate since 1977, and costs for restaurant and café visits are also rising by an above-average speed: up by 9.4% year on year in January. Equally worrying for the months ahead, producer price inflation (PPI) in the food sector still stands near its recent record high. Annual PPI has been positive for the past 26 months, and the 2022 average was the highest reading since the start of the data series in 1985. As a result, the sector's payment performance is forecasted to become slower in 2023, while the number of business failures will rise. To read Tokio Marine's report go to https://www.tmhcc.com/en/news-and-events/trade-credit-uk-food-service-sector-report-2023.
Irish corporate insolvencies increased by 70% year-on-year in Q1. The number of company insolvencies in Ireland increased by 70% year-on-year in the first three months of 2023, part of a trend seen across key sectors, according to the latest figures from CRIFVision-Net. There was a rise in insolvencies in ten counties and economic bellwether sectors such as hospitality (+767%), manufacturing (+375%), retail (+167%), computers (+125%), construction (+117%) and leasing (+67%) all recorded significant increases. Insolvencies were up in 12 out of the 16 sectors analysed, with only legal, accounting and business (-29%), real estate (-82%), electricity, gas and water supply (-100%) and mining (-100%) decreasing year-on-year compared with 2022. To read CRIFVision-Net's news release go to https://www.vision-net.ie/Business-Barometer/.
UK Economy & Exports
The UK is set to avoid recession in 2023 and will gradually return to trend growth rates by the end of next year. According to the latest edition of PwC's UK Economic Outlook, the UK should see growth of around 0.1% in 2023 and 1% in 2024, rising to 1.6% by the end of 2025 as inflation pressures ease significantly over the coming months. However, despite this improved outlook, the report notes that the UK's recovery is lagging behind its G7 peers. Barret Kupelian, senior economist at PwC, commented: "Our analysis suggests the UK has very much passed through the eye of the inflationary storm compared to last year and is showing signs of a return to some sort of normality this year. But any recovery is subject to risks which could include future geo-political shocks, persistently higher inflation pressures and a weaker sterling." To read PWC's news release go to https://www.pwc.co.uk/press-room/press-releases/uk-economic-outlook-april-2023.html.
UK GDP in February 2023 was 0.3% above its pre-COVID-19 level in February 2020. The latest estimates from the Office of National Statistics (ONS) show that monthly GDP was flat in the UK in February 2023, with negative growth in the services and production sectors being offset by positive growth (+2.4%) in construction. There was also a 0.4% increase in the output of consumer-facing services, largely driven by retail trade. Looking at the broader picture, GDP grew by 0.1% in the three months to February 2023, with services growing by 0.1% and production falling by 0.1%, while construction grew by 0.9%. Monthly GDP in February 2023 was 0.5% higher than in the same month last year and is now estimated to be 0.3% above its pre-COVID-19 levels in February 2020. To read the ONS' news release go to https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/february2023.
The UK is on course to avoid recession — although only marginal growth is expected in 2023. The EY ITEM Club's Spring Forecast has advised that it now expects the UK economy to avoid both a technical recession and a calendar year contraction in 2023. The economy is expected to record 0.2% growth this year - a significant upgrade from the -0.7% contraction predicted in January's Winter Forecast. The improved outlook is primarily thanks to better-than-expected GDP in Q4 2022 and the easing of inflationary pressures. The economy's resilient performance also means the UK will likely avoid the two consecutive quarters of contraction that would qualify for a technical recession. To read EY's news release go to https://www.ey.com/en_uk/news/2023/04/uk-now-on-course-to-avoid-recession-with-marginal-growth-in-2023.
UK Economy Shows Resilience in Q1. The National Institute of Social and Economic Research has reported that monthly UK GDP remained flat in February 2023, following growth of 0.4% in January (revised upwards from 0.3%). This monthly figure was driven by growth in construction being offset by contractions in services and production. The services sector was particularly affected by decreases in education and public administration activities resulting from industrial action. GDP grew by 0.1% in the three months to February relative to the previous three months — an improvement on NIESR's previous forecast of -0.1%. NIESR notes that the UK economy has "largely flatlined" following the initial stages of post-pandemic recovery; February's monthly GDP is estimated to be only 0.3% above its pre-pandemic (February 2020) level. To read NIESR's news release go to https://www.niesr.ac.uk/publications/uk-economy-shows-resilience-q1?type=gdp-trackers.
UK exports decreased by £1.1 billion (3.5%) in February 2023. The latest estimates from the Office of National (ONS) Statistics show that in February 2023, the value of UK goods exports decreased by £1.1 billion (3.5%). Exports of fuels to EU countries fell by £0.9 billion, contributing to the decline. After removing the effect of inflation, total exports of goods decreased by £0.8 billion (3.1%). Exports to the EU fell by £0.8 billion (5.6%), and exports to non-EU countries fell by £0.1 billion (0.4%). According to the ONS, the UK's top export markets in 2022 were the US, Netherlands, Germany, China, Ireland, and China. To read the ONS' news release go to https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/bulletins/uktrade/february2023.
The Windsor Framework — a path to easier trade? Atradius has published an article which suggests that, although the recently signed Windsor Framework will help to smooth the flow of internal UK trade, it will do little to mitigate the impact of Brexit on trade with the EU. Atradius stresses that the data clearly indicates that Post-Brexit UK is trading less with the EU, with pronounced implications for wider economic performance. "The economy of the United Kingdom has seemingly gone from bad to worse over the course of 2022 and will stay the worst performer in 2023 among the Group of Seven (G7) large industrial economies," commented Dana Bodnar, an economist at Atradius. To read Atradius' release go to https://group.atradius.com/press/atradius-news/windsor-framework-a-path-to-easier-trade.html.
UK Business Confidence & Retail
Nearly five times more SMEs expect their business to grow than shrink in the year ahead. New research from Premium Credit shows almost five times more SMEs expect to see growth in revenues compared to those who expect revenues to shrink. Premium Credit's Insurance Index, which monitors insurance buying and how it is financed, found 49% of SMEs are predicting an increase in revenue in the next 12 months as business optimism builds, and around 14% are forecasting revenue growth of 25% or more. Just 10% of companies questioned predict revenues will shrink in the year ahead, with 17% saying they will stay the same.  The biggest drivers of SME optimism identified by the research were plans to launch new products and expand into new markets. Around 42% of those worried about the future say their client base has shrunk as firms have gone bust. To read Premium Credit's news release go to https://www.premiumcredit.com/news-and-events/optimistic-smes-bank-on-growing-their-businesses.
Confidence among small businesses in the UK recovered strongly in the first quarter of 2023. The Federation of Small Businesses (FSB) has reported that in Small Business Index (SBI) headline confidence measure bounced back in Q1 from the depths of lockdown-equivalent levels to lightly negative territory (-2.8 points). The FSB notes this is a significant upturn from the negative finding of -45.8 points recorded in the last quarter of 2022 — although it is still some way below the 15.3 point reading registered in Q1 2022. A lightly negative reading means that more small businesses feel pessimistic than optimistic, but the scale of the improvement in sentiment is significant and is the third-largest quarter-on-quarter increase in the SBI's history. All the major industry sectors tracked saw improvements in their confidence ratings, although, despite the uptick, all but one of the sectors remain in negative territory. To read the FSB's news release go to https://www.fsb.org.uk/resources-page/welcome-rebound-in-small-business-confidence-but-cost-of-living-squeeze-is-holding-back-growth.html.
Business confidence bounces back for UK CFOs. According to Deloitte's UK CFO Survey Q1 2023, sentiment among finance leaders of the UK's largest firms has improved significantly since the start of the year. A net 25% of CFOs are more optimistic about the financial prospects of their business than they were three months ago — the largest increase in confidence since the COVID-19 vaccine rollout at the end of 2020. Ian Stewart, the Chief Economist at Deloitte, commented: "Despite a brighter outlook, CFOs are alive to the continued risks facing the economy. Corporates remain in defensive mode, and CFO risk appetite is subdued." To read Deloitte's news release go to https://www2.deloitte.com/uk/en/pages/press-releases/articles/business-confidence-bounces-back-for-cfos.html.
Buoyant Easter fails to put spring into April sales. According to new data revealed by BDO LLP, total like-for-like (LFL) UK sales, in-store and online combined, rose by +2.2% in April. Although total in-store LFLs climbed by +4.4% in the month (from a strong base in April 2022) online sales remained flat, with total non-store LFLs increasing by just +0.6% from last April's base of +6.4%. The lifestyle category once again outperformed the fashion and homewares sectors, growing sales by +5.6% compared to April 2022. Despite an expectation that many consumers would be looking to update their spring and summer wardrobes at this time of year, total LFLs for the fashion sector grew by just +1.7% in April, its second consecutive month of poor results. The homeware sector also didn't perform well, with sales falling -3.0% based on the same month last year. To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2023/buoyant-easter-fails-to-put-spring-into-april-sales.
Confidence among UK SMEs stabilises after falling for over a year. Business confidence among UK SME manufacturers stabilised in the quarter to April, according to the CBI's latest SME Trends survey, ending a run of five consecutive quarters of declining sentiment. The survey paints a picture of tepid demand during the quarter to April, with output contracting for the third consecutive quarter and new orders broadly unchanged through the quarter. However, SME manufacturers expect both output and new orders to pick up in the three months to July. To read the CBI's news release go to https://www.cbi.org.uk/media-centre/articles/confidence-among-smes-stabilises-after-falling-for-over-a-year-cbi-sme-trends-survey/.
Global Economy
The global economy shows resilience in the face of tightening financial conditions. A new report from S&P Global Market Intelligence has suggested that the global economy is performing better than anticipated when 2023 began. Global real GDP growth increased from an annual rate of 1.5% quarter over quarter at the end of 2022 to an estimated 2.5% pace in the first quarter of 2023. Mainland China, India and other emerging markets led the acceleration. Meanwhile, the US and the Eurozone appear to have dodged recessions. The S&P Global Market Intelligence forecast expects world real GDP growth to slow from 3.0% in 2022 to 2.3% in 2023, with the slowdown centred in Europe and the Americas — regions where high inflation and monetary policy tightening are restraining consumer and business spending. Global growth should then rise to 2.7% in 2024 and 3.0% in 2025. To read S&P's news release go to https://www.spglobal.com/marketintelligence/en/mi/research-analysis/global-economy-resilience-tightening-financial-conditions.html.
Which countries are easier for collecting unpaid invoices, and which ones are harder? Allianz Trade's latest report on which countries are the easiest (and the hardest) for collecting unpaid invoices has found that Sweden comes out "on top", followed by Germany, the Netherlands, Finland and Portugal. On the other hand, US$4.2 trillion in receivables is at risk in the most 'complex' countries. These include Saudi Arabia, Bulgaria, Hungary, Poland, Romania, Greece and Italy. The 2022 ranking shows that it is relatively easy to collect debt in three out of ten countries, with the easiest in Western Europe. Johan Geeroms, Director of Risk Underwriting Benelux for Allianz Trade, commented: "This can be explained by government support during the COVID pandemic, which made debt collection procedures fairly rare. But vigilance is needed now that support packages are being withdrawn." To read Allianz Trade's news release go to https://www.allianz-trade.com/en_BE/news/latest-news/collecting-unpaid-invoices-belgium-top-10.html?.
Numerous challenges for companies in CEE result in an increased number of insolvencies. A new study by Coface has reported that corporate insolvencies in Central & Eastern Europe (CEE) increased in 2022. Eight countries experienced a higher number of insolvencies (Bulgaria, Croatia, Hungary, Latvia, Lithuania, Poland, Romania and Serbia), and four countries recorded a decrease (Czech Republic, Estonia, Slovakia and Slovenia). The highest surge of insolvencies was recorded by Serbia and Hungary (+106% and +86%, respectively), while the largest drop was in Estonia (by -17%). Unsurprisingly, the energy-intensive sectors are the ones that suffered the most, experiencing a lengthening of payment delays compared to the prior year and an increase in insolvencies. The construction sector has also been significantly impacted. To read Coface's news release (with a link to the report) go to https://www.coface.com/News-Publications/News/Numerous-challenges-for-companies-in-CEE-result-in-an-increased-number-of-insolvencies.
Recommended Guides: BExA & Company Watch
BExA publishes its latest Guide to Export Credit Insurance (2023 edition). The British Exporters Association (BExA) has published a revised and updated Guide to Export Credit Insurance. The guide's aim is to explain credit insurance for the benefit of members of the British Exporters Association and UK exporters in general. Its authors are Jennifer Donaghy of WTW, Neil Ross of AIG, and Susan Ross of Aon. It contains the following chapters: 
  1.  What Is Export Credit Insurance? 
  2.  The Export Contract And Terms Of Payment (With A Focus On The Export Of Goods) 
  3.  Risks Covered And Not Covered 
  4. The Credit Insurance Market 
  5. Pre-Credit Risk (PCR) 
  6.  Managing Your Export Credit Insurance Policy 
  7. The Insurer's View 
  8.  The Financier's View 
  9. Letter Of Credit, Credit Insurance, Payment Guarantee or Others? 
  10. Claims And How To Make Them (Succeed).
The ultimate guide to company credit scoring. Company Watch has published a whitepaper that discusses how credit reference agencies build and apply company credit scores from the ground up. Company credit scoring has come a long way since the early days of Mercantile Agency credit reports, thanks to the growth of data sources and advanced algorithms such as machine learning and artificial intelligence. The paper explains why not all credit scores are the same and why they differ between CRAs, and it takes a deep look into how company credit scores are put together and presented. To read the whitepaper, go to: https://blog.companywatch.net/resources/company-credit-score-ultimate-guide.
Events & Professional Development
Receivables Finance International Convention 2023, 23-24 May. London.
22 May Awards Dinner.

The 23rd annual Receivables Finance International Convention (RFIx23) is the industry’s leading event, attracting delegates from across the globe; bringing together market leaders and new entrants; providing an essential update on the latest invoice financing trends, market challenges, and financial innovation; as well as excellent networking opportunities. 

Keynote presentations and panel sessions include:
  • The outlook for global trade and its impact on trade finance.
    Marc Auboin, Economic Counsellor, Economic Research and Statistics Division, World Trade Organization.
  • Global zombies – an alternative type of corporate resiliency.
    Professor Edward I. Altman, Director of Research, Credit and Debt Markets, NYU Salomon Center for the Study of Financial Institutions. 
  • Panel session: Market development and business model evolution.
    Moderator: Steve Box, Founder and Managing Director, Kata Executive Consulting. Panellists: James Binns, Managing Director, Global Head of Trade & Working Capital, Barclays; Mencia Bobo, Global Head Trade and Working Capital Solutions, Santander Corporate & Investment Banking; Parvaiz Dalal, Managing Director, Global Head of Payables Finance, Treasury and Trade Solutions, Citi; Ian Duffy, Founder and CEO, Accelerated Payments.
  • Panel session: Regulation and digitalisation – opportunities and challenges.
    Moderator: André Casterman, Managing Director, Casterman Advisory; Chair of Fintech Committee, ITFA Panellists: Jon Boran, Director, Trade Innovation & Solution Development, Lloyds Bank; Jonathan Williams, Head of Transactional Legal; Demica Markus Wohlgeschaffen, Managing Director, Traxpay; Geoffrey Wynne, Partner, Sullivan & Worcester.
  • Fireside chat: Greensill Capital – the story behind the billion-dollar scandal.
    Duncan Mavin, Editor and Columnist, The Washington Post; Author, The Pyramid of Lies: Lex Greensill and the Billion-Dollar Scandal. Interviewed by: Federico Travella, Founder & Executive Chairman, Novicap
RFIx23 is bought to you by BCR Publishing, the world’s leading knowledge provider in receivables finance. For more information and a 20% ticket discount (quote: Credit Insurance News) go to https://bcrpub.com/events/23rd-annual-receivables-finance-international-convention-and- awards.
TXF Global 2023: Export, Agency & Project Finance, 15-16 June. Lisbon, Portugal.
TXF Global 2023 returns to Lisbon for a very special 10 Year Anniversary edition!
Your largest export, agency & project finance event is returning to Lisbon for the second year running! We bring you this innovative, unique and ultimate networking gathering which is absolutely crucial if you work in this industry.
Let the festival commence! Expect:
  • Exclusive networking activities from the hugely popular Lisbon walking tour, to ice-breaker drinks & cocktail reception
  • ECA & DFI CEO hot seat: 1-1 fireside leadership interviews
  • Corporate CEO keynote: Navigating economic turmoil to enable a greener future
  • Tomorrow’s borrowers: The investment landscape & project pipeline
  • Dedicated Uxolo Development & Impact Finance content stream
  • TXF at 10: Legendary panelists from TXF Paris 2013 return to the stage to review the last 10 years of export finance and plot what this means for the next 10 years
  • Delegate list of all those on-site so you can arrange meetings in advance + 1-to-1 dedicated meeting spaces, and separately bookable meeting rooms
  • Even more time and space to network, attend private meetings and take part in intimate roundtables
  • TXF Subscriber Exclusive: Watch all sessions on-demand, or enjoy the full event virtual-only from the comfort of your office chair!
Speaking Opportunities: Contact Tom.Pycraft@txfmedia.com to express an interest in speaking at the 2023 event.
For more information go to https://www.txfnews.com/events/266/TXF-Global-2023-Export-Agency-Project-Finance.
Professional Development
STECIS, the Trade Credit Insurance & Surety Academy endorsed by ICISA, offers a range of webinars and classroom training courses.
Classroom training courses are organised once or twice per year or on demand while webinars are organised multiple times per year or on demand for groups of participants. For 2023 the following courses are scheduled)*.
  • 14 June: Fundamentals of Trade Credit Insurance (Webinar) 
  • 26 & 27 September: the Trade Credit Insurance Foundation Course** 
  • 28 & 29 September: the Advanced Trade Credit Insurance Course** 
  • 15 June 2023: Masterclass TCI – Buy now, Pay later (Webinar) 
  • 10 & 11 October: the Surety Foundation Course*** 
  • 12 & 13 October: the Surety Advanced Course***
* Courses will run on basis of a minimal number of participants.
** Possibility to register ends on the 16th of April 2023.
*** Registration is open until 1st of September 2023.

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 very experienced experts from the industry and there is enough opportunity for asking 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 can be obtained by sending an e-mail to info@stecis.org.
About this month's sponsor: SCHUMANN
At SCHUMANN we optimise the management of risk for credit, surety, political risk insurers and export credit agencies. Our software solutions and risk models are setting the future technological standards for the industry. We are an open-minded and learning organisation which invests heavily in research and development, often with our partners at the University of Goettingen. We aim to stay ahead of the competition with our cutting-edge technology.
We value our independence and are happy to work with any data provider or partner of your choice. We favour long-term partnerships. We invest all of our resources into our customer relationships, and as a result, have never lost a customer in our 25-year history. CAM Credit and Surety enables our customers to automate risk assessment and underwriting processes, while our artificial intelligence handles complex workflows with ease, enabling customers to remain compliant with their regulatory environment.
A SCHUMANN software solution is both future-proof and the most robust on the market – it will provide decades of service and will never let you down.
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