Late Payment & Business Distress

Two million of Britain's small businesses fall victim to late payments. Over a quarter (27%) of British small and medium-sized businesses have admitted to being owed between £5,000 and £20,000 in unpaid invoices, according to research by Payit, NatWest's open banking payments solution. The impact of late payments has been felt across the country, with SMEs reporting over a third (36%) of payments taken in an average month as late. London's businesses have been revealed to be the hardest hit, with 41% of payments coming late. 55% of SMEs say that late payments have increased in the last six months, with knock-on effects being compounded by the rising cost of doing business. To read Natwest's news release go to https://www.natwestgroup.com/news-and-insights/news-room/press-releases/enterprise/2023/dec/two-million-of-britains-small-businesses-fall-victim-to-late-pay.html.

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Only 1% of UK small businesses have never dealt with an overdue invoice. New research from Capital on Tap has found that only 1% of UK small businesses have never had to deal with an overdue invoice. According to those surveyed, businesses in the UK spend an average of eight days chasing unpaid invoices, with overdue invoices equating to just under £1,350 in lost income at any given time. In terms of time spent, the education sector has been impacted the most by overdue invoices, with businesses having to chase late payments around eleven times every month. In second place is the home furnishing industry, with business owners following up on delayed payments ten times a month. In joint third place are those in the healthcare, electrical services, and consulting sectors, with companies having to chase unpaid invoices around nine times per month. To read Capital on Tap's news release go to https://www.capitalontap.com/en/blog/posts/unpaid-invoices/. 

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ICC and ITFA respond to Brussels' proposed Late Payment Regulation. Trade Finance Global (TFG) has reported that the European Union's proposed Late Payment Regulation, a revision of the Late Payment Directive, has sparked responses from the International Chamber of Commerce (ICC) and the International Trade and Forfaiting Association (ITFA). Whilst both organisations commend the EU's core purpose of 'creating a culture of reliable and timely payment", they warn that unintended consequences might disrupt established business practices and supply chain finance mechanisms. ITFA and ICC propose a more nuanced approach that considers different industries' diverse needs and supply chain finance's intricacies. To read TFG's article go to https://www.tradefinanceglobal.com/posts/icc-itfa-respond-to-brussels-proposed-late-payment-regulation/

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4500 UK retailers face an uncertain New Year. According to Begbies Traynor, nearly 4500 UK retailers are in critical financial distress, with critical distress among Food and Drug retailers up approximately 10% and General Retailers up 13.7% compared to the previous quarter. In addition, almost 46,000 retail businesses in the UK are now in 'significant' financial distress – 7.5% higher than Q3 2023 (42,661) and 4.6% higher than the same period in 2022 (Q3 2022: 43,879). Over 20% of all retailers (915) in critical financial distress are online-only organisations. To read Begbies Traynor's news release go to https://www.begbies-traynorgroup.com/news/business-health-statistics/4500-uk-retailers-face-an-uncertain-new-year-as-the-costof-living-crisis-bites-before-christmas.

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Allianz Trade's internal data is recording higher levels of payment issues and disputes. Insurance Business has published an article in which Stephen Bramall, Credit Director for Allianz Trade UK & Ireland, describes how Allianz Trade's internal data is recording higher levels of payment issues and disputes, and he expects to see this continue into 2024. In addition, he notes that higher numbers of corporate insolvencies and tighter financial conditions have resulted in supply chains coming under pressure, with disruptions in the supply chain being one of the key risks businesses faced in 2023 and set to continue into 2024. To read Insurance Business' article go to https://www.insurancebusinessmag.com/uk/news/breaking-news/looking-back--what-2023-brought-for-the-insurance-market-471052.aspx.

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UK & Ireland Corporate Insolvencies

The number of UK company insolvencies for 2023 stands at 30,199 – a 12 % increase compared to 2022. New data from Creditsafe has found that 2,522 companies in the UK became insolvent in December 2023 – a 7% decrease compared to the previous month and a fall of 1% compared to the same month in 2022. 17% of insolvencies in December came from within the UK construction sector. According to Creditsafe, although the current economic challenges are pushing an increasing number of businesses into insolvency, the trends are still uneven. The total number of UK company insolvencies for 2023 rose to 30,199. This number represents a 12% increase compared to 2022 and a 52% increase compared to 2021. To read Creditsafe's news release go to https://www.creditsafe.com/gb/en/blog/reports/insolvencies.html.

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December 2023's corporate insolvency figures for England and Wales are the highest recorded for this month in four years.  Latest data from the UK's Insolvency Service has found that corporate insolvencies for England and Wales decreased by 18.9% in December 2023 to a total of 2,002 compared to November's total but increased by 1.9% compared to December 2022's figure, by 34.4% compared to December 2021's total and by 78.9% compared to pre-pandemic levels in December 2019.​ Nicky Fisher, President of R3, commented: "The figures published today are the highest for December in four years . . . December was tough for many firms as they faced additional expenses at a time when margins were already tight . . . At the end of a tough year, these extra costs could have been the final blow for many businesses and may have led to their directors turning to an insolvency process to resolve their firm’s financial issues." To read R3's news release go to https://www.r3.org.uk/press-policy-and-research/news/more/31914/page/1//.

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Business failures in Ireland are rising but are still below pre-pandemic levels. PwC's latest Insolvency Barometer further reveals that business failures in Ireland, though remaining below 2019 levels, are beginning to revert to pre-pandemic levels. According to PwC Ireland, 717 companies entered insolvency in 2023 – a 32% increase compared to 2022, equating to two companies per day across the year. PwC expects further increases in the business failure rate in 2024, with overall insolvency levels projected to reach close to 1,000. Retail, hospitality and construction are the most impacted sectors. Over the past 19 years, the average number of insolvencies was just over 1,000 per year. To read PwC's news release go to https://www.pwc.ie/reports/restructuring-update-q4-2023.html.

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Insolvencies in the UK construction sector in 2024 are increasing. Tokio Marine HCC's Senior Risk Underwriters, Karen Crowley and Alice Bremner, have authored a UK Construction Sector Report H2 2023 that warns that, following a turbulent 2023, the construction sector continues to face significant hurdles. Despite a brief dip in business failures between 2019 and 2020, insolvencies within the sector have steadily increased, reaching a peak of 4,165 in 2022 –19% of all UK insolvencies. The trend continued in 2023, with data indicating a higher number of failures in the January to September period (3,204) compared to the same timeframe in 2022 (3,093). To read Tokio Marine HCC's report go to https://www.tmhcc.com/en/news-articles/thought-leadership/trade-credit-uk-construction-sector-report-h2-2023.

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UK Economy

PwC UK forecasts the UK will be the fourth best-performing G7 economy relative to pre-pandemic levels. PwC has released its Economic Outlook for 2024 and predicts a more rosy view of the economy in 2024 as the UK turns a page from the post-pandemic years. On the positive side, the Outlook forecasts the UK will be the fourth best-performing G7 economy relative to pre-pandemic levels. Despite the weak projected growth in 2024, the UK will still outperform France, Japan and Germany, with real GDP around 2.7% higher in 2024 on average relative to 2019 levels. Negatively, there will be a significant rise in corporate insolvencies in 2024, to just shy of 30,000, with smaller businesses accounting for the lion's share. The most impacted industries are likely hotels & catering, manufacturing, and transport & storage. To read PwC's news release go to https://www.pwc.co.uk/press-room/press-releases/pwc-uk-economic-predictions-2024.html.

 

Instead of no growth, latest figures indicate that the UK economy shrank in Q3 2023. Revised data from the Office for National Statistics (ONS) shows that the economy shrank in Q3, with GDP contracting by 0.1% between July and September. Previous analysis had suggested growth had been flat in the quarter. Revised data also shows zero growth between April and June, with previous estimates suggesting that Q2 had seen growth of 0.2%. In output terms, there was a 0.2% fall in the services sector in the latest quarter, which offset a 0.4% increase in construction output and a 0.1% increase in the production sector.​ To read the ONS news release go to https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/quarterlynationalaccounts/julytoseptember2023. Licensed under the terms of Open Government. Licence v3.0.

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The UK economy rebounded in November 2023. New data from the Office for National Statistics (ONS) indicates that UK monthly GDP is estimated to have grown by 0.3% in November 2023, following an unrevised fall of 0.3% in October 2023. Services output grew by 0.4% in November 2023 and was the main contributor to the monthly growth in GDP; this follows a fall of 0.1% in October 2023 (revised up from a 0.2% fall in the ONS' previous publication). Production output grew by 0.3% in November 2023, following a fall of 1.3% in October (revised down from a 0.8% fall). The construction sector fell by 0.2% in November 2023 after a fall of 0.4% in October 2023 (revised up from a 0.5% fall). To read the ONS' news release go https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/november2023. Licensed under the terms of Open Government. Licence v3.0.

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BCC data indicates disproportionate impacts of economic shocks on different types of businesses. The BCC's latest Quarterly Economic Survey shows that the percentage of firms expecting an increase in turnover over the next year (56%) has risen to the highest level since Q1 2022, when COVID restrictions were lifted. Only 15% of respondents expect their financial situation to worsen in the year ahead. There was also a minor improvement in overall business conditions, although there were significant sectoral differences. 46% of consumer services firms said they had seen a boost in sales, whereas 35% of hospitality companies and 28% of retailers saw a decrease. Profitability confidence has also improved, with 47% of companies expecting profits to increase in the next year. To read BCC's news release go to https://www.britishchambers.org.uk/news/2024/01/bcc-quarterly-economic-survey-business-confidence-boost-fails-to-revive-investment/. 

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The 'Golden Quarter' fails to deliver as December UK retail sales plummet. According to new data from BDO, the UK retail sector recorded its worst December performance since at least 2017, ending the year with negative like-for-like (LFL) sales figures in all three months of the crucial 'Golden Quarter'. BDO's High Street Sales Tracker recorded a fall of -2.7% for total LFL sales for discretionary spending in December compared to last year's figures. Sophie Michael, Head of Retail and Wholesale at BDO, said: "This is the worst December performance we've seen since our records began, with 2023 only the third year on record with negative in-store sales in each of the three months leading up to Christmas, which last happened in 2015. Taking into account inflation, which still remains high, the seriousness of these results should not be underestimated." To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2023/golden-quarter-fails-to-deliver-as-december-retail-sales-plummet.

 

UK private sector activity endures a year of decline. According to the CBI’s latest Growth Indicator, private sector activity fell slightly in the three months to December (weighted balance of -8%, from -11% in the three months to November). The latest decline extends a stretch of one-and-a-half years without growth, a trend which firms expect to continue in the new year (-6%). Services business volumes continued to fall at a modest pace (-8% from -9% in November), driven by a mild contraction in business & professional services (-10%) while consumer services volumes were unchanged (0%). Distribution sales also declined again (-16%, from -10% in November). Only manufacturing avoided falls in activity, with output stabilising (0%, from -17% in November) after four rolling quarters of contraction. To read the CBI's news release go to https://www.cbi.org.uk/media-centre/articles/private-sector-activity-endures-a-year-of-decline-cbi-growth-indicator/.

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UK CFOs start the new year in positive spirits​. According to Deloitte's latest CFO survey, CFOs of the UK's largest firms are optimistic about prospects for their own businesses as they enter 2024. Sentiment among finance leaders has risen for the second consecutive quarter – to well above average levels – with a net 11% of CFOs more optimistic about the financial prospects of their business than they were three months ago. Ian Stewart, Chief Economist, said: "These findings may seem at odds with recent economic news, particularly a contraction in third quarter GDP and forecasts of sluggish UK growth in 2024. But, while the pace of growth softened in 2023, activity proved more resilient than expected." To read Deloitte's news release go to https://www2.deloitte.com/uk/en/pages/press-releases/articles/deloittes-q4-cfo-survey-cfos-start-the-new-year-in-positive-spirits.html.

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Global Economy 

The global economy is set for its weakest half-decade performance in thirty years. According to the World Bank's latest Global Economic Prospects report, the global economy is set to see the slowest half-decade of GDP growth in thirty years. The new report predicts that global growth will slow for the third year in a row – from 2.6% last year to 2.4% in 2024, almost three-quarters of a percentage point below the average of the 2010s. Developing economies are projected to grow just 3.9%, more than one percentage point below the average of the previous decade, while advanced economies are set to see growth slow to 1.2% this year from 1.5% in 2023. In addition, global trade growth in 2024 is expected to be only half the average in the decade before the pandemic. To read the World Bank's news release go to https://www.worldbank.org/en/news/press-release/2024/01/09/global-economic-prospects-january-2024-press-release?intcid=ecr_hp_headerB_2024-01-09-GEPPressRelease.

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KPMG predicts global GDP growth of 2.2% in 2024 – down from 2.6% in 2023. According to the latest KPMG Global Economic Outlook, with no short-term end in sight to geopolitical uncertainty and tight monetary policies, a significant uplift in global growth is unlikely in 2024. The report forecasts global GDP growth of 2.2% in 2024 – down from 2.6% in 2023, with a return to 2.6% growth anticipated in 2025. More positively, the Global Economic Outlook forecasts see world inflation averaging 5.0% in 2024 and 3.9% in 2025, down from an estimated 6.5% in 2023 and 8.0% in 2022. However, risks are on the upside, as any further shocks to energy prices – or more persistent domestic inflation in some countries – could derail the relatively smooth return to central banks' inflation targets next year. To read KPMG's news release go to https://kpmg.com/xx/en/home/media/press-releases/2023/12/global-inflation-easing-but-high-interest-rates-and-policy.html.

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The world economy avoided a recession in 2023, but a protracted period of low growth looms. The World Economic Situation and Prospects report from the United Nations (UN) has reported that although the world economy proved more resilient than expected in 2023, this masks both short-term risks and structural vulnerabilities. Against a "backdrop of lingering risks and uncertainties", the UN forecasts that global GDP growth will slow from an estimated 2.7% in 2023 to 2.4% in 2024. Growth is then forecast to improve moderately to 2.7 % in 2025, although it will remain below the pre-pandemic trend growth rate of 3.0%. To read the news release with a link to the UN's report (available in various languages) go to https://www.un.org/development/desa/dpad/publication/world-economic-situation-and-prospects-2024/.

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China is set to become the world's largest economy by 2038. According to the Centre for Economics and Business Research's (CEBR) latest league table, the US, although set to remain the world's largest economy for the time being, is expected to be usurped by China by 2038. In a similar time scale, India, currently in fifth place in the rankings, is also expected to rise to third place, behind the US. Japan and Germany will follow in fourth and fifth place, and the UK economy should maintain its position as the sixth-largest economy through to 2038. France, Brazil, Korea, and Canada will follow in seventh, eighth, ninth and tenth place. To read CEBR's report go to https://cebr.com/wp-content/uploads/2023/12/WELT-2024.pdf. 

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The global economy has proved more resilient than expected six months ago. According to Atradius' latest Economic Outlook, the global economy has demonstrated unexpected resilience, surpassing projections made six months ago. Atradius has revised its 2023 GDP assessment, now estimating a 2.6% growth – a 0.4% increase from its July forecast. However, despite this positive revision, the report also highlights a slowdown in global trade growth to 0.8% in 2023, notably lower than the 3.0% recorded in 2022; the anticipated export boost following the cessation of China's zero COVID-19 policy did not materialise, and the manufacturing sector, particularly in Europe, is experiencing a recession. Looking ahead to 2024, Atradius predicts a recovery in trade growth to 2.5% but cautions that GDP growth may dip to 2.1% before rebounding to 2.6%, presenting a relatively weak performance by historical standards. To read Atradius' Economic Outlook go to https://atradius.co.uk/reports/economic-research-economic-outlook-december-2023.html. 

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Allianz Trade forecasts 2024 GDP growth of +1.4% in the US, +0.8% in the Eurozone, +4.6% in China and +0.6% in the UK. Allianz Trade's latest Global Economic Outlook: 2023-2025 suggests that, although growth momentum has weakened, it has remained resilient. Allianz Trade expects a soft landing in the US and the Eurozone to "muddle through", with GDP growth in 2024 of +1.4% in the US, +0.8% in the Eurozone, +4.6% in China and +0.6% in the UK. The Outlook also notes that business insolvencies are picking up in most countries, with data suggesting a divide between SMEs facing liquidity and profitability issues and larger firms that remain resilient. To read the report go to https://www.allianz.com/en/economic_research/publications/specials_fmo/2023_12_15-Global-Economic-Outlook.html.

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Red Sea crisis: not a red flag for the global economy (yet). According to recent calculations by Allianz Trade, the recent Houthi attacks on commercial ships in the Red Sea have caused notable disruptions in global shipping. In the ten days leading up to 7 January, shipping volume in the Suez Canal experienced a year-on-year decline of 15% and the Bab-el-Mandeb Strait, which leads into the Red Sea, saw a drop of 53%. The number of cargo ships and tankers passing through the Suez Canal decreased by 30% and 19%, respectively, and shipping activity around the Cape of Good Hope nearly doubled. Allianz Trade warns that Europe could see a reduction to GDO growth of 0.9% and the US a decrease of 0.6%, leading to a global GDP growth reduction to 2%. However, longer-term disruptions could reduce global trade growth in volume by 1.1% points to 1.9%, raising the risk of a delayed rebound from the 2023 recession. 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/2024_01_12_what_to_watch-AZT.pdf.

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Credit Management: New Resources

The difference between a restructuring plan and a CVA. R3 has published a guest blog from Shaun Barton at Company Closure discussing restructuring plans introduced as part of the Corporate Insolvency and Governance Act (CIGA) 2020 and explains how the concept differs from the more established Scheme of Arrangement and Company Voluntary Arrangement (CVA) options by enabling companies to invoke something known as cross-class cram down – a first in English Law. Cross-class cram down allows a company to apply directly to the court to approve a proposed restructuring plan even when there are creditor classes who have voted against it. In practice, this means that a class of creditors could vehemently oppose the restructuring yet still be bound to its terms. To read R3's blog go to https://www.r3.org.uk/press-policy-and-research/r3-blog/more/31909/page/1/understanding-the-restructuring-plan-the-latest-insolvency-solution/.

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Company credit checks matter more than ever in 202: Company Watch offers a free trial of its solutions to mitigate risks. Company Watch has warned that the financial strain of continued high interest rates means that around 7,000 businesses will likely fail in each quarter of 2024 and suggested that relying on basic credit checks is "a risky move" in such turbulent times. To this end, Company Watch is offering companies a free trial of its portfolio of tools,  including H-Score – financial health rating; TextScore – which detects risk in financial reports; Forecast View – modelling of future risk scenarios; Portfolio Monitoring – an analysis of overall risk exposure; Email Alerts – daily alerts on risk profile changes. To arrange, complete the online form at https://www.companywatch.net/arrange-a-trial/.  

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How to access export credit insurance: a guide for brokers and exporters. GOV.UK has updated its guide designed to help exporters and brokers understand the credit insurance cover provided by UKEF and how this can benefit exporters. The guide gives an overview of UKEF's Export Insurance Policy and explains how exporters and brokers can access and manage this insurance policy. It also aims to answer common questions relating to the Export Insurance Policy. To be eligible, UK exporters must be unable to obtain credit insurance from the private market. For more information go to https://www.gov.uk/government/publications/export-insurance-policy-a-guide-for-brokers/how-to-access-export-credit-insurance-a-guide-for-brokers-and-exporters.​

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Events & Professional Development

10th Annual Supply Chain Finance Summit, 25-25 January 2024, Madrid.

Events are moving fast in supply chain finance. The outlook for the sector is bright with the prospect of
greater freedom of operations brought by the Electronic Trade Documents Act and MLETR, new
development in SCF solutions such as in deep-tier financing, pre-shipment financing, supplying the long
tail, as well as AI. The 10th annual Supply Chain Finance Summit organised by our partner BCR in
cooperation with FCI is returning to Madrid for a two-day event to explore ways of better integration in
this new metaverse.
Join SCFS 2024 on 24-25th January in Madrid, at the offices of Cecabank, to hear from senior industry
experts and discuss the challenges of creating resilient, sustainable and harmonised payables finance
solutions, which will form the basis of the future of supply chain financing.
Click here for more information and to register.

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ICISA Surety Week 2024, 19 February (08:00) - 22 February (17:00) CET.

Surety week is a week of celebration of Surety sector. With this event, ICISA aims at increasing awareness of the valuable economic role of surety industry. Experts in the sector agreed to join our initiative and share their views on issues faced by the industry nowadays.

The event will take place between 19 - 22 February 2024. A total of 8 virtual sessions will be organized during the week, featuring debates, interviews, webinars and presentations. The sessions will be organised daily from 10:00 - 11:00 CET and 15:00 - 16:00 CET.

The agenda and details about registrations will be published in the upcoming weeks.

IDD certificates will be issued on request.

For more information, go to https://icisa.org/event/icisa-surety-week-2024/.

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TXF Americas 2024: Structured Trade & Export Finance, 28-29 February. East Hotel Miami
Join the best structured trade and export finance event in the Americas with over 200 of the most active lenders, ECAs, exporters, borrowers, traders and more looking to finance deals and meet key clients. Special offers available - email marketing@exilegroup.com to enquire.
For more information go to https://americas2024.exilegroup.com/.

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MENA 2024: Export, Project & Development Finance, 4-5 March. Dubai, Ritz Carlton 
Join us as we gather a deal-hungry attendee list from leading ECAs, exporters, borrowers, EPCs, developers, lenders, investors, ECAs and other key export and project finance players!

Special offers available - email marketing@exilegroup.com to enquire.

For more information go to https://mena2024.exilegroup.com/.

 

TXF Global 2024: Export, Agency & Project Finance,11-12 June. Athens, Divani Caravel

The most distinguished export finance event around returns and this year to Athens! With over 1000 in-person attendees, a stellar speaker list and a networking opportunity that is crucial if you work in this industry. 

Special offers available - email marketing@exilegroup.com to enquire,

For more information go to https://global2024.exilegroup.com/.

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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 2024 the following courses have been planned in Q1:

• 26 & 27 February: The Surety Bonds Foundation Course

• 26 & 27 February: The Trade Credit Insurance Foundation course

• 28 & 29 February: The Surety Bonds Advanced Course.

• 28 & 29 February: The Trade Credit Insurance Advanced course
   

All classroom courses take place in the Steigenberger Airport Hotel close to Schiphol Airport/Amsterdam, the Netherlands. The courses include lunches and a dinner at the end of the first training day. Very experienced experts from the industry host the courses, and there is plenty of opportunity for asking questions, discussions and networking.

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There is also the possibility of arranging in-house training, with a tailor-made outline for your staff based on the training demands of your company. The training will be effected at your own offices or at a venue of choice.

Detailed information about the webinar and classroom training courses is available on Stecis’ website: www.stecis.org. Also, further information can be obtained by sending an e-mail to info@stecis.org.

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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.