Credit Connect hosted the launch of its first-ever Commercial Working Capital Group last week which saw commercial credit and collection strategies and the future of the sector discussed by sixteen leading professionals at Marsh McLennan’s central London office.
The impact of rising energy prices and interest rates was discussed as was the availability of credit and the ability to collect using new technology. Customer engagement was also a key topic.
Commenting on the event host Colin White Founding Director at Credit Connect said “It was great to see such a great mix of leading commercial credit professionals discussing the industry issues and hearing differing views from different parts of the commercial credit, collections and insolvency community.”
“We look forward to continuing to discuss at our next planned Working Capital Group at the Midland Hotel in Manchester on Thursday 23rd November.”
Event Co-Chair Brendan Clarkson, Director at PKF Litttlejohn said “In this economically challenging climate, optimising working capital is still a number one priority for businesses. Unstable supply chains, rising raw material costs, high inflation rates and increasing interest rates characterise the current market environment. The challenges, therefore, require a strong focus on working capital management and transparency of the underlying processes.”
“Our goal is to provide a dedicated working capital forum which would be thought-provoking but which would also give support for the issues discussed. The event is the first of a planned series of meetings, each meeting will bring 15-20 different working capital specialists from lenders, regulatory specialists to trade creditors.”
Event thought leader, Mark Palmer, Chief Commercial Officer from Hamilton Court Foreign Exchange said “ I thought the event was great. Refreshingly candid discussions and debates, and I took away some great ideas on how the forum suggested I approach some of our own challenges.”
Attendee Sara Souyave, Solicitor and Director of Litigation at Goldsmith Bowers Solicitors said “This was a really interesting roundtable discussion about the economic climate and how it is affecting the availability of commercial credit. Great to get some insight from such a broad range of people.”
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Event Questions round-up
Responses to selected questions:
The rise in zombie companies was a significant talking point pre-covid, and with interest rates continuing to rise does the group think this will rear its head again?
Brad Morris, Expedia: As the COVID loans are now being called in & wound down, this should have cleansed the potential of zombie companies.
With two Interest rates hikes expected in the next 2 months what will be the impact be upon businesses?
Brad Morris, Expedia: It will impact their bottom line as they have not factored in larger cost of funds, so they will be looking to secure credit from other providers ( suppliers, sales-aid lessors, fin techs) to fill the gap and allow for more diversification in their funding base.
Interest rates are forecast to peak at around 5.5% – 6%, but are you carrying out any scenario analysis where they move higher than this? If so, what are the outcomes of that?
Brad Morris, Expedia: Anything more that 6% will start impacting the UK economy against other centers in the EU (eg., Ireland CBoI base is 4%) and the UK will start compounding the impression that the UK has lost its attractiveness as an international financial centre (eg., on going political instability, BREXIT trade frictions, inflation)
What has been the biggest challenge you’ve faced with prices continuing to rise?
Brad Morris, Expedia: Maintaining positive customer experience as a competitive advantage (eg., faster response times to credit decisions, changes in T&Cs, flexibility in terms etc)
Is anybody able to share any practices that they’ve had successes with finding readily available company financial information?
Brad Morris, Expedia: Some of the national registrars are starting to share a bit more information (e.g. Italy, Luxembourg, France, Germany), but still dated. It is taking more smarts to look at news wires, the company’s own testimonies on their “About” page, who are their customers, any KPIs, what accreditations they have (eg., ISO gradings, sector trade bodies), the quality of their partnerships (eg., a “Gold” / “Platinum” distributor), any regulatory oversight (eg., the Solicitors SRA, accounting). Places like Pitchbook & Crunchbase can also help with signals about investments, strategic partnerships or other M&A activity. Also, are they hiring? Check out their careers pages or social media.
Do you think that interest rates will stop at 6%, or will the central bank have to go higher?
Brad Morris, Expedia: I think 6% will be a max (maybe 6.5%), but not much higher for any protracted period
If the central bank lose (or possibly have lost) control of inflation, is there anything the government can do?
Brad Morris, Expedia:Tax rate changes are the only real instrument left – but this has to be moved with caution
Energy prices have been a big component of inflation but have largely fallen back to pre-Russia-Ukraine levels. Is anyone undertaking any contingencies ahead of winter to mitigate the risk of future price spikes?
Brad Morris, Expedia: Only if the customers have the working capital to start hedging prices on core commodities
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