The Analysis News & Opinions


Opinion


‘Creditors must be wise around the festive period’


Christmas and New Year can be challenging for SMEs, with lots of competing priorities, and often a difficulty in collecting much- needed cash. The run up to the holidays can often see a spike in sales, but the old maxim of ‘a sale is only a sale once it has been paid for’ is certainly relevant at this time of year. In addition, the period often brings extra


demands on payroll, holidays and annual bills, which can force companies to evaluate their ongoing financial position. Current economic factors are also likely to


play a significant role in lending over the coming months. Research by the insurer RSA in 2014 showed that business survival rates have fallen significantly since the financial crisis, with the majority of SMEs not surviving more than five years. In this environment, it is important to apply


good credit management, and understanding the client is crucial, enabling the correct processes to be put in place. I would certainly recommend ensuring that any paperwork enforces rights, as well as spreading any risk and enforcing stringent credit


limits.


Planning for the worst eventuality would be wise, putting on an appropriate stop to credit and implementing a system of chasing should the business fail to make repayments. It is worth noting the impacts of economic


uncertainty are not always negative. A weak pound presents many businesses with the chance to maximise their export potential, and look for funding as a means to facilitate growth rather than survive. With currency continuously fluctuating,


SMEs cannot rely on any consistency when it comes to the export market. This places further emphasis on the need for lenders to understand the changing circumstances of their clients, enabling them to alter the funding they provide and support them through good times or bad.


David Parsons Strategic development director at Secure Trust Bank Commercial Finance


139,000 ‘zombies’ found in the UK


New research has shown that 139,000 companies


in the UK are only


paying the interest on their debt and not repaying the debt itself – but some may be doing so by choice. The number of businesses in this position


– equivalent to 8% of all UK firms – has returned to levels more in line with previous years after falling to 69,000 last year (4%), according to research by R3. President, Andrew Tate, said: “Apart


from the initial shock of the EU referendum result, the business environment has so far been relatively benign over the course of 2016. It is more likely that otherwise healthy businesses are taking advantage of record low interest rates to keep cash in their business. “Other indicators of acute distress are all


down such as having to negotiate payment terms with creditors and being unable to repay debts if there was small increase in interest rates. This suggests that businesses just paying the interest off are not as lifeless as they may have been in previous years.” According to the research, 33,000 businesses are struggling to pay debts when


they fall due. This represents a decrease from the same time last year when 55,000 were in that position; there were a peak of 134,000 businesses in this position in May 2013. Mr Tate added: “It is all very well just


paying off the interest on debts at the moment, but businesses in this position also need to make sure they have enough cash to hand to make any balloon payments on their debts when they are due.”


Contingent litigation to be up for debate


The importance and future of contingent litigation will be up for discussion as CCRMagazine and Moriarty Law are to work together to invite senior professionals to participate in a high-level debate looking at the prospects for the sector. Stephen Kiely, editor of CCRMagazine,


said: “It has been an increasing trend over the past period that legal companies are playing a key role in the collections strategies of the largest creditors and debt purchasers. The market is seeing some very interesting moves in terms of issues like the use of scoring, technology, and culture.


10 www.CCRMagazine.co.uk “This is such an important issue at the


moment that we have chosen to do a special focus, which you can read in this month’s edition of the magazine. “So I am absolutely delighted to be


working with Moriarty Law on what looks set to be a very important and extremely timely debate, as well as an excellent opportunity to share ideas.”


January 2017


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52