UK government crackdown on late payments. The UK government has unveiled new measures to support small businesses and the self-employed by tackling "the scourge of late payments," which, according to the Smart Data Foundry, costs SMEs £22,000 a year and, according to FSB research, leads to 50,000 business closures a year. The government will consult on "tough" new laws that will hold larger firms accountable, while new legislation being brought in the coming weeks will require all large businesses to include payment reporting in their annual reports. Enforcement will also be stepped up on the existing late payment performance reporting regulations, which require large companies to report their payment performance twice yearly on GOV.UK. Prime Minister Keir Starmer said: "After years of delay, we’re bringing forward measures that small businesses have long been calling for to tackle late payments once and for all." For more information, go to https://www.gov.uk/government/news/crack-down-on-late-payments-in-major-support-package-for-small-businesses.

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SME late payments have increased by 48%, with £348 billion in outstanding payments. According to research from Aldermore’s SME Growth Index, over 3.6 million (72%) UK SMEs have some form of outstanding late payment from customers, leaving them £96,772 out of pocket on average. The total value of late payments has increased from the end of 2023, up 41% from £68,715. On average, SMEs are likely to wait an extra 46 days for a late payment to be settled and spend thirteen hours of company time chasing outstanding amounts. This is an increase from last year when SMEs waited thirty-four days and spent nine hours of company time following up on each payment. The increase in late payments is also having a domino effect on SMEs. Over a third (38%) of businesses are having difficulties paying essential business costs, and 36% are struggling to pay their own suppliers on time due to cash flow issues – an increase in figures from 2023. To read Aldermore's news release, go to https://www.aldermore.co.uk/newsroom/sme-late-payments-increasing-by-48-with-348-billion-in-outstanding-payments/.​

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Outstanding payments in 2024 are more common than at the height of the pandemic. According to a new joint report from Cebr and iwoca, the number of UK suppliers offering repayment terms over sixty days to customers has surged from just 7% of suppliers in 2020 to 17% in 2024. In addition, 84% of suppliers say they have to adjust payment terms for business customers, nearly twice (46%) the rate four years ago and 75% of suppliers offer longer repayment terms for loyal or large customers or bigger orders. The report also found that outstanding payments in 2024 are more common than at the height of the pandemic, with 48% of UK suppliers now owed more than £10,000 from their trade customers, up 13% from 2020 levels. However, just 58% of suppliers offering flexible payment terms conduct credit checks. To read iwoca's news release, go to https://www.iwoca.co.uk/iwocapay/trade-credit-and-digitisation-report.

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Profit Warnings in Q3 2024 decreased by 20% compared to Q2 but are still cause for concern. InfolinkGazette's Quarterly Report for Q3 2024 shows that the number of profit warnings continues to cause concern, with numbers, despite a decrease of 20%, equivalent to those recorded at the height of the COVID-19 pandemic. Furthermore, InfolinkGazette notes this number is slightly misleading as it is the result of fewer companies citing a Material Uncertainty in their filed reports. In fact, excluding ‘Stand Alone Going Concern’ events, profit warnings remained consistently high – 27% higher than in the same period prior to the pandemic. In addition, InfolinkGazette's report warns that, despite signs that the number of insolvencies being filed has started to even out, they remain considerably higher than those seen in recent years. To read InfolinkGazette's full report, go to https://www.techcitylabs.com/resources/ig-report-q3-2024?utm_source=email&utm_medium=cind&utm_campaign=rpt-q32024.

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Most UK trade sectors show a year-on-year increase in business distress, with construction at the top of the list of distressed sectors. The latest Business Distress Index statistics from Real Business Rescue shows that construction remains the UK sector with the greatest number of businesses in significant financial distress at 89,824 in Q2 2024 vs 83,332 in Q4 2023, followed by Support Services (89,763), Real Estate & Property Services (65,919), Professional Services (50,683), General Retailers (42,992), and Health & Education (39,933). Shaun Barton, National Online Business Operations Director at Real Business Rescue, commented: "The number of company insolvencies in 2023, and the start of 2024, match up to that presented during the 2008 – 2009 recession, which is worrying." To read Real Business Rescue's news release, go to https://www.realbusinessrescue.co.uk/advice-hub/the-business-distress-index-q2-2024.

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Business insolvencies in England and Wales in August 2024 were nearly 15% lower than the same month in 2023. The latest data from the Insolvency Service shows that corporate insolvencies in England and Wales decreased by 8.9% in August 2024 to 1,953 compared to July and decreased by 14.6% compared to August 2023's figure of 2,286. However, the number of company insolvencies remained much higher than those seen both during the COVID-19 pandemic and between 2014 and 2019. Tim Cooper, President of R3 and a partner at Addleshaw Goddard LLP, commented: “The monthly fall in corporate insolvency figures is likely to be a result of the traditional slowdown in appointments we see during August and shouldn’t distract from the fact that businesses are still struggling and many are still trying to manage high levels of debt at a time when trading conditions remain difficult. To read R3's news release, go to https://www.r3.org.uk/press-policy-and-research/news/more/32201/page/1//.

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Corporate insolvencies in Ireland in 2024 are on track to be 30% greater than in 2023. New research by Deloitte has found that there were 238 corporate insolvencies in Ireland in Q3 2024, up 60% compared to the same quarter in 2023. This brings the total number of insolvencies in the first three quarters of 2024 to 650, up by 36% compared to the same period in 2023. SMEs continue to be disproportionately affected, accounting for 98% of activity levels. The hospitality and retail sectors accounted for 28% of activity levels in 2024, both of which significantly increased from the same period in 2023. Commenting on the latest statistics, James Anderson, Turnaround & Restructuring Partner, Deloitte Ireland, said: "At the current activity level, corporate insolvencies in 2024 are on track to be 30% greater than 2023 with forecasted activity to be in line with 2017, which had 874 appointments." To read Deloitte's news release, go to https://www.deloitte.com/ie/en/about/press-room/corporate-insolvencies-q3-2024.html.

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UK company insolvencies in September 2024 were 16% lower than the same period last year. New data from Creditsafe has found that 2,190 companies in the UK became insolvent in September 2024 – a 7% decrease compared to May and 16% lower than the same month in 2023. After a challenging few months, this suggests that some businesses have adapted to economic pressures and are starting to see some relief. 16% of insolvencies in September came from within the UK construction sector (including construction giant, ISG). The total number of UK company insolvencies for 2023 was 30,199. This number represents a 12% increase compared to the same period in 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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​​​​​UK Economy

Muted economic growth momentum lies ahead for the UK. KPMG's latest Economic Outlook reports that, despite a rebound at the start of the year, UK GDP growth is expected to have slowed again in the second half of 2024, with the economy on course to grow by 1% this year overall. GDP growth could pick up slightly in 2025 to 1.2% as a less restrictive monetary policy and continued improvements to real wages are expected to support stronger growth in consumption and business investment. However, longer-term GDP growth is challenged by a historically weak pace of productivity growth, which could limit growth to around 1.1% per year in the medium term. This represents a significant slowdown compared to the pace of growth before the Financial Crisis of 2008. To read KPMG's news release, with a link to the Outlook, go to https://kpmg.com/uk/en/home/insights/2018/09/uk-economic-outlook.html.

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UK economic growth remains low by historical standards. The National Institute for Economic and Social Research's (NIESR) latest GDP Tracker notes that GDP grew by 0.5% in the three months to July. While this makes the UK the fastest-growing economy in the G7 in the first half of this year, NIESR cautions that this could be attributed to 'catch-up' effects after experiencing a shallow technical recession last year. NIESR expects the pace of growth in the second half of 2024 to be slower than the beginning of the year, forecasting a 0.2% growth in Q3. These numbers remain broadly consistent with the longer-term trend of low but stable economic growth in the UK, but looking back at the longer-term picture, economic growth remains low by historical standards. Moving forward, trend growth is only slightly higher than 1% per annum, which is low relative to the past. To read NIESR's news release, with a link to the Tracker, go to https://www.niesr.ac.uk/publications/uks-growth-momentum-remains-healthy-pace-slows?type=gdp-trackers.

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UK GDP is estimated to have had little new growth since March. The latest data from the Office for National Statistics (ONS) indicate that the UK's monthly GDP is estimated to have shown no growth in July 2024 after also showing no growth in June 2024. Quarterly figures estimate that the UK's economy grew by 0.5% in Q2, following a 0.7% increase in Q1. However, although this growth in the first half of 2024 more than reversed the decline in output from the second half of 2023, monthly GDP figures indicate that GDP has experienced little new growth since March. To read the ONS' monthly and quarterly news releases, go to https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/july2024 & https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/articles/quarterlyeconomiccommentary/apriltojune2024.
 

More than a quarter of businesses reported a decrease in their turnover in August 2024 compared with July 2024. New data from the Office for National Statisttics (ONS) has found that 26% of trading businesses reported a decrease in their turnover in August 2024 compared with July 2024. This is an increase of 3% compared to last month and the highest proportion reported since January 2024; in contrast,14% reported an increase in their turnover, remaining broadly stable from last month. 19% of trading businesses expect an increase in turnover in October 2024, with 53% expecting turnover to stay the same and 14% expecting a fall. Businesses reported that economic uncertainty (21%) had the most impact when considering challenges to turnover. To read the ONS' news release, go to https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/bulletins/businessinsightsandimpactontheukeconomy/19september2024. 

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Heavy discounting squeezes UK retailers' margins further in the run-up to the 'Golden Quarter'​. According to BDO's latest High Street Sales Tracker, total UK retail sales grew by +4.7% compared to September last year. This was largely driven by online sales growth in what was another disappointing result for high street stores in the lead-up to the so-called 'Golden Quarter'. Online sales growth of +11.6% is likely a result of substantial discounting as retailers try to clear high volumes of unwanted stock after a challenging summer. In-store sales recorded flat growth of +1.8%. Sophie Michael, Head of Retail and Wholesale at BDO, commented: "These sales figures may appear positive at first glance, but they show clear issues for the sector as we approach the most critical time of year." To read BDO's news release, go to https://www.bdo.co.uk/en-gb/news/2024/heavy-discounting-squeezes-retailers-margins-further-in-the-run-up-to-golden-quarter.

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UK private sector growth expectations soften. According to the CBI's latest Growth Indicator, private sector firms in the UK expect no change in activity over the next three months. This ends a run of seven consecutive surveys in which growth expectations had been positive. However, the headline number masks divergence between different sectors. Business volumes are anticipated to pick up marginally in services (+4%), as growth in business & professional services (+7%) offsets a modest decline in consumer services (-9%). Both distribution sales (-4%) and manufacturing output (-7%) are also expected to fall marginally in the three months to December (-7%), the latter marking the first time that manufacturers haven't expected growth in ten months. A softening in the outlook comes after activity fell in the three months to September (-15%), with all three major sectors reporting falling volumes. To read CBI's news release, go to https://www.cbi.org.uk/media-centre/articles/private-sector-growth-expectations-soften-september-2024-growth-indicator/.

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The UK manufacturing sector reports a uniformly disappointing set of results. According to the CBI's latest Industrial Trends Survey, UK manufacturing output volumes fell sharply in the three months to September and are expected to decline again in the three months to December. This is the first time expectations have been negative since November 2023. Output decreased in fourteen out of seventeen sub-sectors in the quarter, with the fall driven by the motor vehicles and transport, metal products and paper, printing and media sub-sectors. In addition, total order books were reported as below "normal" in September, having deteriorated relative to August (-35% from -22%) – significantly below their long run average. Export order books were also seen as below "normal", having deteriorated considerably relative to August (-44% from -22%) – also far below the long-run average and at their weakest since December 2020. To read CBI's news release, go to https://www.cbi.org.uk/media-centre/articles/cbi-industrial-trends-survey-sept-2024/.

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The private sector UK business population has decreased by over 8% since 2020. The latest data from the Office for National Statistics (ONS) shows that, although the number of UK private sector businesses increased from 4.5 million in 2010 to a peak of around 6.0 million at the start of 2020, there have been several marked decreases since 2017. The highest rate of increase was 6.8% (2013-2014), followed by 5.0% (2011- 2012). In contrast, a reduction of 6.5% between 2020 and 2021 was recorded – the largest year-on-year decrease in the series since 2010, and between 2020 and 2024, the total business population decreased by 482,000 (8.1%). The net change in the business population is determined by the balance of new business start-ups and de-mergers (inflows) against those businesses that closed, merged or were taken over by another business (outflows). To read the ONS' news release, go to https://www.gov.uk/government/statistics/business-population-estimates-2024/business-population-estimates-for-the-uk-and-regions-2024-statistical-release.

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Global: Late Payment, Insolvencies & Economic Growth​

The global economy remains resilient. D&B's latest Global Economic Outlook advises that the global economy remains resilient despite still-high global interest rates together with ongoing geopolitical tensions in some parts of the world. The latest output data reveals that Q2 growth was robust globally but varied by region. Growth in the US was strong, accelerating from Q1, driven by consumer spending. The Eurozone posted modest growth, led by France, Spain, and Italy, together offsetting a disappointing quarter for Germany. The Netherlands returned to growth in Q2, with GDP expanding at the fastest rate in two years. Economic output generally expanded more quickly in emerging economies, with strong growth in the Philippines, Malaysia, and Thailand. Outside of Southeast Asia, the Chinese mainland’s economic growth decelerated in Q2 but remained healthy, while Brazil’s economy held up well. To read D&B's news release, go to https://www.dnb.co.uk/perspectives/finance-credit-risk/country-risk-global-outlook.html.

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The global economy is turning a corner. According to the OECD's latest Interim Economic Outlook, global growth remained resilient through the first half of 2024. With robust trade growth, improvements in real incomes, and a more accommodative monetary policy in many economies, the Outlook projects global growth persevering at 3.2% in 2024 and 2025, after 3.1% in 2023. GDP growth in the US is projected to slow from its recent rapid pace, but to be cushioned by monetary policy easing, with growth projected at 2.6% in 2024 and 1.6% in 2025. In the euro area, growth is projected at 0.7% in 2024 before picking up to 1.3% in 2025. China’s growth is expected to ease to 4.9% in 2024 and 4.5% in 2025. To read the OECD's news release, go to https://www.oecd.org/en/about/news/press-releases/2024/09/oecd-global-economy-is-turning-the-corner-as-inflation-declines-and-trade-growth-strengthens.html.

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The global economy is expected to grow moderately this year. Atradius' latest Insolvency Outlook, September 2024, suggests that the global economy is expected to show a moderate expansion of 2.7% this year – remaining steady but with low growth by historical standards. Atradius predicts that, despite a relatively slow start to the year, the US economic outlook for 2024 remains positive – with a gradual slowdown through the rest of the year the most likely scenario. In the eurozone, growth is expected to remain sluggish this year. Southern European countries, such as Spain, Portugal and Greece, are doing relatively well. However, Germany remains a weak spot due to its sluggish manufacturing sector. To read Atradius' Insolvency Outlook, go to https://atradius.co.uk/reports/economic-research-insolvency-forecasts-september-2024.html.

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G20 GDP growth remains relatively stable in the second quarter of 2024. The OECD has reported that GDP growth in the G20 area remained relatively stable in Q2 2024, with a 0.7% quarter-on-quarter increase according to provisional estimates –  slightly down from 0.8% in the previous quarter. China, India, and the US contributed the most to the G20's economic growth in Q2, although Brazil and Saudi Arabia saw the highest growth rates (both 1.4%), while growth in China and India slowed (from 1.5% to 0.7% and from 1.7% to 1.3%, respectively). Japan saw a significant recovery, from a 0.6% contraction in Q1 to a 0.7% expansion in Q2, whereas the US recorded a more modest increase, from 0.4% to 0.7%. The remaining G20 countries experienced weaker growth than the G20 as a whole, with GDP in Korea and Germany even contracting (by 0.2% and 0.1%, respectively). Compared with the same quarter of 2023, GDP in the G20 area grew by 3.1% in Q2. To read the OECD's news release, go to https://www.oecd.org/en/data/insights/statistical-releases/2024/09/g20-gdp-growth-second-quarter-2024.html.

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Steady (not stellar) global growth lies ahead until 2026. Allianz Trade's latest Economic Outlook predicts global growth of +2.8% until 2026, with the US economy slowing (growth of +1.7% in 2025 and +2.2% in 2026) but remaining the main support to the global economy in 2024. Momentum is gradually building in Europe, and Allianz Trade expects growth to increase to +1.4% in 2025-26 – slightly above potential. However, Germany will remain in recession for a second year in a row, with growth expected to bottom out in late 2024. The Chinese economy remains in a slowdown, but further monetary easing and accelerating fiscal spending in the coming quarters should bring China's GDP growth close to the official target of "around +5%" in 2024, and it should remain above +4% in 2025-26. To read Allianz Trade's news release, with a link to the report, go to https://www.allianz-trade.com/en_global/news-insights/economic-insights/economic-outlook-2024-2026.html.

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French businesses are experiencing increased payment delays and rising insolvencies. Coface's latest survey on payment behaviour in France shows that 85% of companies (82% in 2023) have experienced payment delays, with the majority indicating that they are longer (51 days compared to 48.2 days last year) and more numerous. Although no sector has been spared, the automotive, energy, pharmaceuticals, agri-food, financial services and construction sectors have been particularly hard hit, with more than 25% of companies in these sectors reporting delays of more than two months. This deterioration in payment behaviour is also reflected in a rise in insolvencies, which have now stabilised at much higher levels than in 2019 and 2023. 39,506 insolvencies were recorded in the first seven months of the year, up 23% on 2023 and 26% on 2019. Businesses with sales of less than €250,000 account for 87% of insolvencies. To read Coface's news release, go to https://www.coface.com/news-economy-and-insights/increased-payment-delays-for-french-businesses-amid-growing-social-and-political-risks.

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The global insolvency surge isn't over just yet. Atradius' latest Insolvency Outlook, September 2024, forecasts a 23% increase in global insolvencies in 2024, with significant increases in countries adjusting from low insolvency levels or experiencing spikes, such as Australia, New Zealand, Sweden, Canada, the Netherlands, and the US. Denmark is the only country with a substantial decrease. Of the twenty-nine markets that Atradius monitors in this report, twenty-three have adjusted fully to normal (i.e., their insolvency level is now at least 95% of its level in 2019) or are overshooting their pre-pandemic insolvency levels. The picture for 2025 is more stable, with insolvencies set to reduce slightly by 3% globally, reflecting decreases in Europe and Asia Pacific. To read Atradius' Insolvency Outlook, go to https://atradius.co.uk/reports/economic-research-insolvency-forecasts-september-2024.html.

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16% of German companies report ultra-long overdue payments. Coface's latest survey on corporate payment experience in Germany shows that, although the payment behaviour of German companies remains stable, the increase in credit risks from accumulated overdue payments and the pessimism of German companies about their current situation is striking. 16% of German companies reported ultra-long overdue payments that have a share of 2% or more of their annual turnover (+7pts vs 2023). Coface's experience suggests that 80% of these overdue payments are never paid back. In addition, 48% of German companies indicated that their current business situation deteriorated between 2023 and 2024, while only 9% reported an improvement. Companies' sentiment is now more pessimistic than after the beginning of the pandemic or the start of the war in Ukraine. To read Coface's news release, go to https://www.coface.com/news-economy-and-insights/germany-corporate-payment-survey-2024-simmering-under-the-lid.​

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Credit Management Resources

Free service provides Prompt Payment Reports and insight into payment culture in the UK. The Good Business Pays website has a free-of-charge facility that enables users to enter a company's name to receive a Prompt Payment Report that details the average time the company takes to pay invoices, the volume of invoices it pays late, its performance in comparison to other companies, and the payment terms it offers. Users of the website are also encouraged to submit their own data based on past trading experience. In late 2021, the service introduced an annual Good Business Pays Fast Payer Award for companies that demonstrate good practices in fast and on-time payments to their smaller suppliers over time. The service has accredited nearly 300 companies this year with its Fast Payer Award. For more information, go to https://goodbusinesspays.com/.

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UK Export Finance is making its credit insurance more accessible with a new online portal. UK Export Finance (UKEF) has launched an online portal for credit insurance applications. This means that UK businesses can apply for government export insurance without being required to complete a PDF form, a feature intended to shorten the application process significantly. UKEF notes that this is particularly valuable for SMEs, which may face challenges securing private-sector finance. Kate Dixon, Managing Director of Yarwood Leather (one of the first businesses to use the new portal), commented: "The support from UKEF has opened up new markets for us in territories which are not covered by our usual credit insurer." UKEF is aiming to support over 1,000 SMEs a year by 2029. To read UKEF's announcement, go to https://www.gov.uk/government/news/export-insurance-applications-made-simpler-for-businesses-with-new-online-portal.

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Events & Professional Development

​​​​Trade Credit Insurance Week 2024. ICISA Event. 8 October - 10 October 2024. Online.

Trade Credit Insurance week is a week of celebration of Trade Credit Insurance sector. With this event, ICISA aims at increasing awareness of the valuable economic role of TCI 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 7-10 October 2024. A total of 8 virtual sessions will be organized during the week, featuring debates, interviews, webinars and presentations.

The prgramme includes:

• Net Zero: How insurance supports the path to net zero​. October 9th, 9:00 AM (BST)

• All about data - Unlocking the future of trade, credit and risk​. October 9th, 2:00 PM (BST)

• Trading on credit – how business view credit and how TCI proves its worth​. October 10th, 9:00 AM (BST)

• NCBR: Assessing the impact of Nuclear, Chemical, Biological and Radiation Risk on credit insurance. October 10th, 2:00 PM (BST)

The full programme with list of speakers can be downloaded at https://icisa.org/event/trade-credit-insurance-week-2024/.​

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Launching a New Credit Insurance Venture. 15 October 2024. Online.

Trade Finance Global (TFG) is set to host an exclusive roundtable webinar entitled "Launching a new credit insurance venture: a comprehensive guide." This virtual event will bring together top experts from the credit insurance industry to share insights on market entry, growth opportunities, and operational strategies.
Deepesh Patel, Editorial Director of TFG, will moderate the discussion, and will be joined by four distinguished panelists:

• Stuart Lawson, Global Head at Aon Credit Solutions;

• Marc Meyer, SVP Subject Matter Expert in Credit Insurance at Tinubu;

• Carmine Mandola, Former CEO of CrediArc & Coface;

• Tobias Powell, Head of Credit, Surety & Political Risks, SCOR P&C EMEA.

The webinar will highlight crucial aspects of launching and operating a credit insurance business. It will also explore recent trends in credit insurance, and opportunities in underserved markets.
The panellists will examine key considerations for market entry, financing and operational strategies, technological advancements, and digitalisation in the sector.
Attendees will gain valuable insights from case studies, including how SBI General Insurance Company Limited (SBIG) executed a successful diversification with a niche market positioning and Etihad Credit Insurance's strategy for SMEs in Dubai.
"This webinar will be your gateway to the future of credit insurance," said Deepesh Patel, Editorial Director at TFG. "It brings together industry titans to unpack the complexities of launching a credit insurance venture. From exploring untapped markets to leveraging cutting-edge technologies, we'll provide a roadmap for success in this dynamic field."
The event is open to everyone, from industry professionals and entrepreneurs to those simply interested in the credit insurance sector. Registration details are on the TFG website at at https://www.tradefinanceglobal.com/webinars/launching-a-new-credit-insurance-venture/.

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About this month's sponsor: Farosol

Farosol is a global network of credit insurance brokers with 14 partners, covering 30 countries and helping over 5,000 clients protect their businesses. With an annual insurable turnover of more than €30 billion, Farosol offers a wide range of tailored credit insurance and credit management services, including asset-based finance.
As businesses face an upsurge in unpaid invoices and a growing number of insolvencies Farosol's global network – combined with local expertise – helps companies access competitive rates for international solutions, while still enjoying the personal service of independent brokers.
Farosol is all about building close relationships, delivering expert advice, and keeping things transparent. Clients also receive a regular newsletter with updates on credit risk trends and credit management products specific to each member's country, ensuring everyone stays informed in today's challenging environment.
For more information, visit www.farosol.com.