Almost 70 per cent of delegates polled at the Conference said their businesses were witnessing a recovery in trade compared with just 13 per cent that had seen no sign of an upturn.

The delegates painted a picture of the domestic and global economy being at a crossroads on the road to recovery.

While in excess of 24 per cent said demand in export markets had not reduced over the past 12 months, more than 23 per cent said it had – depending on which economic and geographic regions they were trading with.

In terms of the domestic economy, more than 46 per cent said demand for their products and services had not dropped over the year but 39 per cent said they had endured a fall in demand.

Delegates remained unsure about the Lib-Con coalition Government ahead of tax rises and public sector spending cuts in the emergency Budget on 22nd June. Almost 42 per cent thought the new administration would be positive for the UK business climate but almost 40 per cent remained undecided.

The poll produced evidence of businesses undertaking a cautionary stance to protect themselves against potentially damaging effects of the downturn – more than 58 per cent have strengthened their credit management in the past 12 months.

The conference at the Palace Hotel in Manchester was addressed by Dr Mohamed Djeddour, Head of International Business Programmes at Manchester Business School, who spoke on The UK Economy – exhaustion of the old model and prospects for a new growth path.

Other economists to speak were Juan Gomez, Head of Economic Strategy at Manchester’s Commission for the New Economy and Christine Altuzarra, an analyst in the Economic Studies and Country Risk Department of Coface in Paris, where she is primarily in charge of industrialised countries and sectors.

Christine Altuzarra said the worldwide economic crisis had been the worst and deepest since the first oil crisis of the mid-1970s and that cycle durations tend to be narrower and narrower.

She said growth had returned globally in 2010 with emerging economies outstripping that of industrialised nations and that nations in the eurozone are likely to endure a more painful and slower recovery than others outside the zone – highlighted by the crisis gripping Greece and concerns about the economies of Spain and Portugal.

Ms Altuzarra believes the UK will see growth of 1.3 per cent in 2010 -  as France – compared to her forecasts of 1.5 per cent for Germany and nearly 3 per cent for the United States.

Mr Gomez, whose speech was entitled ‘The North West Economy: Growth with Confidence?’ said the worst effects of the recession had passed and that the North West was set for a modest rate of growth.

Philip King, chief executive of the Institute of Credit Management (ICM), delivered a speech on ‘Out of Recession: Risk & Response’.

His speech supported the findings of the poll by showing how companies were beginning to benefit from an improvement in business as the nation emerged from recession.

It was the first time that Coface, a leading provider of country, sector and business climate ratings and a world leader in credit management services, had staged the conference outside of London.

Xavier Denecker, the managing director of Coface – UK & Ireland, acted as conference moderator and told delegates that Coface selected Manchester because it was home to the industrial revolution and had transformed itself into “one of the most important cities in the UK and has been able to reinvent itself into a dynamic metropolis, with an extensive presence from the service, finance and media sectors.”

The conference was attended by over 200 finance directors and credit management professionals, their advisers and those with an interest in country risk.

Contributed by Coface

The influential think tank the National Institute for Economic and Social Research reckons the economy expanded 0.2 per cent in the quarter to August – a big psychological boost for a lot of businesses as it would suggest we can consign this recession to history. Exports are up, the stock market is buoyant, and big corporate deals such as the Orange/T-Mobile tie-up and Kraft’s acquisition of Cadbury are being mooted for the first time in ages.

On the darker side, unemployment is still growing. I recently emailed two friends, both of whom were working for large corporates a year ago, to find the messages bounced back. Both had lost their jobs. Next year they will be joined by a crowd of public sector workers as a new government struggles to balance the books. The price of gold has broken $1,000 an ounce, indicating investors are still worried about gremlins in the global economy. And the £8.4 billion fall in lending to non-financial businesses in July was the biggest since records began.

There are surely few periods in living memory when economic indicators have been more keenly pored over, or generated more headlines. And yet it’s businesses that create statistics, not the other way round. Just as you can’t take success for granted in a growing economy, failure is not inevitable in a shrinking one. Whether a company is swimming with or against the economic tide will be determined by the ability of its management to tune into business opportunities rather than the daily onslaught of economic data and expert debate.

www.growthbusiness.co.uk

Image Copyright Flickr

The views contained in this article are solely those of the author and do not necessarily represent the views of the Commercial Finance People

Some of the banks are reluctant to do so, preferring to use Government support to rebuild balance sheets and lend only to ‘blue chip’ businesses.

But another area is frequently overlooked by the media – the expansion of trade credit. An estimated 80% of all transactions take place on open account and if this percentage could be expanded on a secure basis, the effects on the UK economy could be beneficial indeed.

Moreover, much of the credit granted is normally given and received by businesses broadly described as SME’s. Yet this is the sector least well prepared to do so. Only a minority of small businesses boast a professionally qualified credit manager and in many cases where one is in place, he or she faces a constant battle within the business with an aggressive sales arm (sometimes even the MD) determined to achieve sales at all costs. Frequently there is no
properly formulated credit policy and credit granting takes place in a a vacuum quite independent of the overall objectives and targets of the business. The consequence is obvious – bad debt and poor collections.

In some ways this is surprising. Since the recessions of the 1980’s it has become far easier to reconcile the effective granting of credit with controlled sales expansion. Comprehensive on line
credit information is available to all sectors of the market at a reasonable price. Training in credit management, through the efforts of such organisations as the Institute of Credit Management, has become far more widely available. The number of outside agencies concerned with credit management has mushroomed – factors, discounters, debt collection agencies, are all selling their services to the people on the industrial estates who are the backbone of the economy.

Yet, at CPA we see daily evidence of weak credit management. Goods and services get supplied on open credit to companies who are illiquid to the point of insolvency. Credit limits are ignored or the level of credit is allowed to grossly over run. Invoices are raised on incorrect corporate names or trading styles. Then there is frequent failure to pursue due debt with urgency or to deal with disputes effectively. And so on.

We do what we can to help by giving advice and support.  To some extent the debt purchase service that we offer, provides a framework for effective credit control as it require clients to chase debts and submit them for purchase in a timely way, and then show reasonable care and prudence in granting credit

But of course the scale of the problem is such that it is way beyond the ability of any one organisation to influence it. And it makes you wonder about the extent to which people are missing opportunities to sell to well established and profitable businesses because of an inability to obtain and interpret data. Of course, poor credit control goes hand in hand with indifferent management and sales practice.  How many credit granters are trained to look hard at the figures contained within a credit report rather than simply accepting the credit limit indicated without further analysis – or indeed discussion with the customer? How often do smaller businesses use the copious on line material available these days to market and sell as well as to credit check? Some do of course, but judging from every day experience they are in a minority.

So what to do? The problem is one that will not be solved in the short term and is certainly beyond the scope of government, The inherent ordinariness of the credit management function means that all too often it does not attract high flyers. It is probably the case that a majority of the better trained credit professionals are employed within the financial sector rather than within industry. Yet the importance of cash flow within industry has never been higher and from a lenders perspective, the debtor asset is often the most significant.

So perhaps, here is a way in which the financiers can help to repair some of the damage that has been done to the UK economy in the past two years, By developing advisory services to industry and more important, linking the provision of financial facilities and loans to competence and performance as opposed to old fashioned security they can play their part in raising standards in British business.

Factors and discounters have always made judgements about the quality of a debtor book before granting facilities But these judgements have not always extended to any serious analysis of the people running the sales and credit operations – and lending bankers often have very little idea as to the quality of the people involved, relying purely on formulaic judgements of the quality of security. Even where there is some analysis of the quality of the management and the processes that exist within the firm, if the assessment is negative, the lender simply declines the business and does nothing more.

If lenders were prepared to spend time and resource identifying and plugging the management and operational gaps that are all too often perceived, they would not only raise the quality of the security they need in order to lend but could also  make a real contribution to economic recovery. 

We can but hope!

Contributed by David Hawkins – CPA    www.cpa.co.uk