Daily Bulletin

Men's Weekly

.

  • Written by Kieran Hall



Businesses urged to be vigilant as new data indicates more overdue payments More businesses are reporting overdue payments from customers and suppliers, while the risk of non-payment has risen in Australia, according to the latest NCI Trade Credit Risk Index released
today.

Based on data combining insurance claims received from Australian businesses, collection actionsand overdue payments, the NCI Trade Credit Risk Index is the nation’s leading forecaster of future company insolvencies.

The latest NCI Trade Credit Index score of 798 is up 4% over the past 12 months – signalling riskier business conditions for bad debts – with the result also representing the highest Q4 score in three years.

The findings also reveal the value of trade credit insurance claims paid in 2018 was $64 million – a19% spike on total claims paid in 2017.

Significantly, there was a 41% increase in the number of trade credit insurance claims received in Q4 2018 compared to the corresponding period in 2017, with an average claim value of $97,000. The number of collections lodged in Q4 2018 was also 15% higher than in Q4 2017.


NCI Managing Director Kirk Cheesman says the latest Index results are cause for concern for Australian businesses and the economy.

“Our findings reveal a higher level of defaults from overdue payments and collection activity.

Generally, an increase in these areas typically results in increased insolvency activity within 6-12 months,” said Mr Cheesman.

“When it comes to overdue debts, we’re finding that businesses are increasingly willing to take early collection action against their customers and suppliers. And if they’re still not paid promptly, they’re increasingly instigating legal action.

“It shows that businesses are losing patience with slow payers, which is likely the result of their own cashflow struggles to meet their own debts.”

Mr Cheesman said Q4 2018 brought significant insolvency activity nationwide – including RCR Tomlinson, Tasman Market Fresh Meats, Strongbuild Commercial, Laura Ashley and Special One Grain Accumulator – and warned of possible further insolvencies in coming months.

“In addition to the higher levels of bad debt and overdue accounts that we recorded last year, the first quarter of the year is traditionally the peak period for insolvencies, so we’ll be watching the January to March period closely,” he said.

“When companies collapse, many others are left out of pocket, so it’s a good time for businesses to review their customers and suppliers and the credit levels they’re granting.

“All businesses need to remember that trade credit insurance is the best safety net against bad debts, enabling them to insure against their customers defaulting on payments due to insolvency.”

Key findings from the latest NCI Trade Credit Risk Index (2018 Q4):

Index Score: 798 (up 4% from Q4 2017)
Collection actions: 698 (2018 total: 2,977)
Number of claims paid: 310 (2018 total: 917)
Value of claims paid: $17 million (2018 total: $64 million)
Notable business failures: RCR Tomlinson, Tasman Market Fresh Meats, Strongbuild
Commercial, Laura Ashley, Special One Grain Accumulator
State with most claims received: New South Wales (32% of national claims)
Other states where claims were received: QLD (26%), WA (18%), Victoria (14%), SA
(8%), NT (1%) and ACT (1%). No claims received in Tasmania.

Top 10 industries for trade credit insurance claims received (2018 Q4):

1. Employment agencies ($7.75 million)
2. Labour hire ($6.18 million)
3. Building/hardware ($5.34 million)
4. Electrical ($4.67 million)
5. Food/provisions ($2.13 million)
6. Steel ($2.04 million)
7. Manufacturing ($1.27 million)
8. Plumbing ($1.05 million)
9. Finance ($1.05 million)
10. Equipment hire ($975,220)

About NCI and the Trade Credit Risk Index

Established in 1985, National Credit Insurance (NCI) is Australia’s leading trade credit insurance broker. Having recorded data since 2006, it releases its NCI Trade Credit Risk Index every quarter.

The higher the Index score, the riskier the trade credit environment.

How to Choose the Right Business Networking Event in Brisbane for You

In Brisbane, there’s no shortage of business networking events that can help you grow your business, connect with key professionals, and discover new opportunities.  But with so many options, how d...

Daily Bulletin - avatar Daily Bulletin

Critical Commercial Electrician Services Your Business Can't Afford to Ignore

Being a business owner in Australia means you have your work cut out for you. From managing employees to keeping customers happy, you've got your hands full. The last thing you need is electrical i...

Daily Bulletin - avatar Daily Bulletin

Promotional Badges: A New Avenue for Marketing in the Digital Age

Social media campaigns, digital ads, and influencer partnerships dominate today’s marketing industry. However, promotional products are making a comeback as brands look for unique and creative ways ...

Daily Bulletin - avatar Daily Bulletin

Why Content Marketing Is Critical for Your Business’s Success?

On some level, content marketing is used in every digital marketing campaign. Important messaging about a product, service, or brand will be conveyed through content marketing assets, whether writte...

Daily Bulletin - avatar Daily Bulletin

Tips from Organisational Change Management Experts for Leading Successful Transitions

Corporate evolution has accelerated dramatically in today's volatile business environment, requiring leaders to develop sophisticated approaches to managing workforce transitions across technologica...

Daily Bulletin - avatar Daily Bulletin

Cross-Continental Collaboration: Nutifood and Viplus Dairy to Create Australian- Standard Premium Dairy Brand

Vietnam’s Nutifood has officially entered a strategic partnership with ViPlus Dairy, a heritage-rich dairy manufacturer with over 130 years of experience in Gippsland, Australia, to establish an int...

Daily Bulletin - avatar Daily Bulletin

LayBy Deals