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UK “double dip” mirrored by small businesses
• UK small business turnover falls • Export turnover dips in Q1 but up year on year
Export turnover for the same period is also down by 9 per cent, confirming a slow start to the year. However, year on year (YoY) export turnover is still up 68 per cent on Q1 2011.
Peter Brinsley, International Manager at ABN AMRO Commercial Finance comments, “These disappointing recent results are reflective of a challenging trading environment and echo the economic picture as the UK falls ‘technically’
“Short-term paralysis fueled by continuing speculation of a double dip recession should now be at an end and small businesses should interpret these figures as a blip and not a trend. Export turnover is still up significantly on 2011 overall and there are growth opportunities available, particularly for bold and agile small and medium sized businesses”.
The Cashflow Barometer is a quarterly indicator of the financial performance
of UK small businesses, based on analysis of 700 companies.
Sectors show mixed performance
Despite quarterly performance falling in Q1, some sectors are still up on the same period in 2011, indicating that they are holding on to performance gains built up over the last few years.
Turnover fell, or remained stagnant, across all sectors between Q4 2011 and Q1 2012. The recruitment sector has seen the largest contraction in turnover in this period (11 per cent).
Yet, turnover grew slightly YoY in the services (1 per cent), engineering (0.5 per cent) and recruitment (1 per cent) sectors.
The manufacturing and distribution sectors have seen consistent turnover decline YoY, with a fall of 5 and 6 per cent respectively.
Peter Brinsley comments, “It’s encouraging to see the services sector holding up in the medium term yet it’s certainly worrying to see manufacturing and distribution performance falling and this has no doubt contributed to us entering the double dip.
“The ability of UK manufacturers to tap into global demand rather than sticking to the domestic market alone has been an important source of growth but many of these businesses will now be feeling the effects of the unstable Eurozone and a reduced demand from Europe, the US and Asia. Such businesses should focus on maintaining cash flow to ensure they can keep things ticking over.”
Payment times fall
Despite shaky performance, invoice payment times have actually fallen for domestic and export customers.
Export payment times fell from 63 days to 60 between Q4 and Q1, while in the domestic market, this decreased on average by 1.5 days.
The most significant reduction across all sectors was seen in manufacturing, where payment times fell from 61 days to 60 between Q4 and Q1 and 64 days to 60 YoY.
Peter Brinsley comments, “Late payments are a persistent headache for businesses so it’s great to see this small positive shine through the otherwise gloomy economic forecast.
“For exporters in particular, late payment can be a major hurdle inflated by problems with time zones, language barriers and lack of knowledge ‘on the ground’. Businesses need the education and financial confidence to overcome these challenges and make the most of opportunities in the current economic climate.”
Notes to editors
About The Cashflow Barometer Report
The Cashflow Barometer is comprised of statistics from almost 700 ABN AMRO Commercial Finance customers. All companies in the sample fall into the BIS definition for small businesses – under £5.6m turnover and fewer than 50 staff. Percentage changes are based on mean averages for monthly turnover, customers, time taken to pay invoices and invoice numbers for the years 2007-11. The percentages included are percentage changes between two values.
About ABN AMRO Commercial Finance PLC (formerly Venture Finance PLC.)
ABN AMRO Commercial Finance is an award-winning Invoice and Asset Based Lender and part of the ABN AMRO Commercial Finance Group. Established in 1989, the company provides Factoring, Invoice Discounting, Export Finance, Structured Finance, Asset Based Lending and numerous related services to start-ups through to £250m turnover organisations. Providing consistent support via its 200+ staff and 11 regional offices, ABN AMRO Commercial Finance helps clients manage working capital, refinance, restructure, fund business opportunities and expansion, purchase new equipment and finance M&As.