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High risk: Over three million British companies in the dark over business credit

7/19/2007

Courtesy of http://www.creditsafeuk.com/

High risk: Over three million British companies in the dark over business credit

• Over three million* or 75% of British companies have never used a business credit referencing service
• Over a quarter of businesses that have used a credit referencing service have not used one for more than a year
• A quarter** of small and medium sized businesses fail as a result of the late payment of invoices

New research published today by Creditsafe, the business credit information experts, reveals that over 3.3 million or 75% of British companies are failing to protect their cashflow by using a business credit report, despite increasing numbers of company liquidations**.

Creditsafe's research reveals that even if companies are using credit referencing services they are doing so with alarming infrequency. Over a quarter (26%) of UK businesses that have used a credit referencing service have not used one for more than a year and a third of businesses (that have used a credit referencing service) have not used one for more than four months. Creditsafe warns that companies risk late or failed payments that could jeopardise the future of their enterprise if they fail to check the creditworthiness of customers, business partners and suppliers.

Small to Medium Sized Enterprise (SME) business owners and managers are putting their companies at considerable risk given a quarter of SMEs in Britain fail as a result of interruptions to business cashflow***. Three quarters (76%) of SMEs have never used a business credit referencing service, compared to just one-in-five (20%) of large organisations.

Simon Camilleri, managing director, Creditsafe UK, said: "Companies are putting their future financial security at serious risk by not assessing the creditworthiness of customers, suppliers and business partners. Particularly at risk are small businesses that cannot afford late or failed payments if they are to meet their obligations, such as paying employees, or meeting customer orders. Credit reference checks can help businesses agree appropriate credit limits to offer other businesses and the timescales they should allow for payment."

Industry sector findings
On an industry basis companies in the retail, health and leisure sectors are least likely to use credit referencing services, with just 14% using these facilities to mitigate business risk. Shockingly, under a third (27%) of companies in the financial services sector use these services, compared with 42% of manufacturing companies and 44% of businesses in the wholesale industry.

Industry	Businesses that have used a credit referencing service
Wholesale	44%
Manufacturing	43%
Construction/transport/ communications/utilities/mining	31%
Business/financial services	27%
Health/retail/hotels & restaurants/other community social	14%

Source:Creditsafe

Regional findings
Creditsafe's research reveals companies operating in Wales & West of England are the least likely to use a credit referencing service. Companies operating in Greater London and the South East are the most likely to have used a credit referencing service, with almost a third (27%) employing credit checking services.

Table One: Regional breakdown of companies that have used a credit referencing service

Region	Businesses that have used a credit referencing service
London & South East England	27%
Midlands	26%
Northern England	20%
Scotland and Northern Ireland	19%
Wales & South West England	16%

Source:Creditsafe

Simon Camilleri, continued:
"Business credit risk changes daily, indeed we register over 800 new CCJ's everyday. Therefore, monitoring the credit profile of your suppliers and customers should be a core business process, not just a one off exercise. Active credit management can help companies mitigate the financial risk they face, protecting revenue streams and cashflow. Utilising services such as those provided by credit referencing agencies can help companies avoid problems with cashflow or failed payments that can result in business failure."

Credit referencing services help company owners and managers mitigate risk by analysing the financial structure and creditworthiness of a business. Credit referencing services provide credit ratings and proposed credit limits that should be offered to customers and suppliers to mitigate risk, based on the company’s anticipated ability to pay. These services can also analyse an organisation's credit history, including details of Company Voluntary Agreements (CVAs), County Court Judgments (CCJs) against the business, invoice payment history or directors with County Court Judgments (CCJs) and bankruptcies to their name. Credit referencing agencies help businesses manage complex financial information, the scale of which is emphasised by the 7,500 sets of accounts filed each day and 10,000 company name changes registered each week.

Notes to editors

*Beaufort Research Limited conducted a telephone survey of 565 British businesses in April 2007.
**Source: Insolvency Service (latest figures published February 2007)
***Source: Federation of Small Businesses

For more information please contact:
Ewan Robertson
Citigate Dewe Rogerson
020 7282 2981

Stephen Fishleigh
Citigate Dewe Rogerson
020 7282 2981

Mathew Cory
Citigate Dewe Rogerson
020 7282 2859

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