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Credit management survey reveals north-south divide in business confidence |
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A new survey of credit managers representing a broad cross-section of UK industry has revealed a significant north-south divide in business confidence levels for the next twelve months. The survey, conducted by leading accountant and business consultant Moore Stephens, also reveals that more than half of respondents expect the overall cost of credit-managing key accounts to increase, while over one third anticipate demands for more generous discount terms from their major customers.
On a scale of 1 to 10, respondents expressed an average confidence level of 6. Businesses in London and the South-East expressed much greater confidence in the industries in which they operate than did the rest of the country. 56 per cent of businesses in this region recorded confidence levels of 7 or higher, whereas only 36 per cent of respondents from the rest of the country recorded these confidence levels.
More than 55 per cent of respondents expected the overall cost of credit-managing their key accounts to increase, with only 3 per cent expecting it to fall. In this category, there was comparatively little variation between the different regions, with London and the South-East just two or three percentage points more optimistic in this regard than the rest of the country. Roughly 36 per cent of respondents, meanwhile, expected to have to agree to demands for increased discounts from their major customers, with London and the South-East again exhibiting marginally greater confidence than the rest of the country in their ability to resist such pressures.
Just under 35 per cent of respondents expected their days’ sales outstanding to increase by up to 5 per cent, while roughly the same percentage expected it to remain unchanged. Slightly over ten per cent of those who responded to the survey anticipated an increase of between 6 and 10 per cent in this category, the highest percentage of these being in London and the South-East.
Jeremy Willmont, a Moore Stephens corporate recovery partner said "The underlying message from the statistics is that the cost of managing accounts is expected to increase significantly as the credit crunch continues to bite, with the most severe pressure being exerted on those smaller operators who lack the economies of scale needed to absorb the increased costs of operating in a depressed economic climate."
A number of respondents noted that their bad debts had increased this year, and that demand for extended payment terms had increased. Others noted that the high street chains continue to increase pressure on margins, and there was an expectation that small-to-medium-size customers would be increasingly prone to bad debts.
Some respondents anticipated a slowdown in customer payments, and continued consolidation within their specialist sectors. One said, "We anticipate having to keep tighter controls on credit limits, and we expect smaller businesses to encounter difficult conditions," while another warned, "We expect we will need to be even more vigilant as costs and the general economic climate impact our customer base". Others still confirmed that they were already seeing evidence of the tougher stance taken by the banks in granting credit to some of their customers.
Overall, there appeared to be no great expectation among credit managers of any really significant change in export volume turnover. Twenty per cent thought there might be an increase of up to 5 per cent, while just under 50 per cent expected levels to remain more or less the same. There was no major divergence in opinion in this category between different parts of the country
Roughly 45 per cent of those credit managers who responded to the survey said they anticipated requesting an increase in insured limits, as a result of greater volume of supplies and customers taking longer to pay. Once again, London and the South-East exhibited the highest level of demands in this category, with only 38 per cent of respondents in the region anticipating there would be no increased limits.
Click here to download a pdf copy of the report.
The Moore Stephens Credit Managers Confidence Survey includes responses from a broad cross-section of businesses in the UK to a targeted, web-based survey by the Moore Stephens Corporate Recovery Group. Responses were received from credit managers in a wide variety of industries throughout the UK.
Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading specialist in business recovery, rescue and insolvency. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting networks, with 621 offices of independent member firms in 95 countries employing 19,279 people. Fee income increased in 2007 by US$340.3 million to US$1,884.0 million, an annual growth rate of 22%, doubling network turnover in the past three years.
Further information:
Jeremy Willmont, Moore Stephens
Tel: +44 20 7334 9191
jeremy.willmont@moorestephens.com
Issued by:
Chris Hewer, Merlin Corporate Communications
Tel: +44 1903 50 20 50
chris@merlinco.com
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