Creditsafe Watchdog Report finds
UK sales recorded four consecutive quarters of growth in 2017, rising by 24.91 per cent or £1.77 trillion worth of sales in the last three months of the year. Bad debt also dropped to its lowest point at the end of 2017, with UK businesses chasing an average of £193,014 worth of unpaid invoices in Q4 2017, compared with £271,699 at the start of last year.
Across the 12 core UK business sectors analysed (Farming and Agriculture, Construction, Banking and Financial, Hospitality, IT, Manufacturing, Professional Services, Retail, Sports and Entertainment, Utilities, Transport and Wholesale), the number of company failures declined by a quarter (25.18 per cent) across the year. The main company failures for Q4 2017 included Monarch Airlines, which ceased trading in October with a turnover of £558 million and Multiyork Furniture, which entered administration with a turnover of £50 million.
The UK economy also experienced a drop in the number of start-ups, with 10,381 fewer companies launching at the end of the year compared with the start of 2017.
The British manufacturing sector enjoyed a buoyant final quarter of 2017, with Nissan Motors and The Royal Mint both recording a significant increase in turnover across the last three months of the year. Recording an uplift of 22 per cent and 40 per cent respectively, Nissan increased its turnover by £1.16 billion and The Royal Mint by £1.45 million.
“The acceleration in sales output in 2017 coupled with stalled employment, which declined by nearly 1 per cent in the last three months of the year, indicates that the workforce is being squeezed to produce extra GBP,” said Cato Syversen, CEO of Creditsafe.
“We know that 60 per cent of UK businesses are chasing late payments, which directly impact business growth, particularly for SMEs, so the news that bad debt is falling is welcome news. Bad debt owed to companies dropped by £100 million from Q3 to Q4 and debt owed by companies dropped by £711 million in the same period.
“This will be particularly felt by the UK utilities sector, which on average pays its bills 10 days beyond terms, but receives payment from its suppliers 24 days beyond terms. Poor payment practices to that extent are simply not sustainable.”