Credit Management July and August 2020

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BUSINESSES with more than £50,000 of unpaid invoices could benefit from a new scheme that buys those invoices for cash, turning a potential bad debt write off into positive cashflow. New finance provider Azzurro Associates is looking to provide cash against at least £1bn of UK businesses’ unpaid invoices to help provide much needed liquidity during and beyond the current COVID-19 crisis. It is especially targeting companies with between £50,000 and £10m in unpaid bills for which it will not only provide upfront cash, but also share in the collections it achieves on any outstanding debts. Azzurro Associates’ new commercial debt solution differs from ‘traditional’ invoice finance in that the former advances cash against invoices that are still within term (i.e 30 days), whereas Azzurro provides cash for debts that are overdue or delinquent, and that a business is struggling or has failed to collect. Andrew Birkwood, CEO of Azzurro Associates, believes this is the first time that companies in the B2B sector have been able to benefit in this way: “As COVID-19 leads to more businesses failing to pay their suppliers, businesses further up the supply chain need to make sure they don’t run out of cash,” he says.“When collections activities are exhausted, the only option left is the Courts, but this costs money, takes time, and there is still no guarantee you’ll get NEWS ROUNDUP Azzurro seeks to acquire £1bn in overdue invoices Andrew Birkwood, CEO of Azzurro Associates any money at the end. Now Financial Directors have a better option – a way of generating immediate cash from bad debts to avoid an inevitable coronavirus cashflow crunch.” Azzurro purchases invoices up to a maximum of six years from the due date, paying anything up to 50 percent of the INSOLVENCY original invoice value depending on the age of the debt and the credit profile of the debtor. In addition, it shares a proportion of the collections it achieves, which can also be as much as 50 percent. It buys portfolios of all sizes from £50,000 and above, which may comprise a small number of large invoices or a large number of small invoices, provided the smallest invoice value is greater than £100. Authorised and regulated by the Financial Conduct Authority (FCA), Azzurro adopts a fair and balanced recoveries process, with a creditor’s brand reputation being of upmost importance. This is achieved by utilising credit reference agency data to determine the appropriate servicing strategy, allowing forbearance and breathing space where required. Where customers do not engage in the amicable contact strategy, Azzurro uses a combination of bureau data and the expertise of a panel of preferred collections partners to ensure only the right cases are selected for litigation. Interim Small Business Commissioner Philip King, whose office champions fair payment practices and supports businesses looking to resolve payment disputes, says that cashflow is critical: “At times like these we need creative ideas and I’m delighted to see organisations like Azzurro introduce different and innovative solutions.” Elsewhere, a study by Iwoca suggests unpaid invoices are piling up at SMEs across the country with nearly half (40 percent) facing over £10,000 in unpaid invoices. One in four of those businesses worry they won’t survive into 2021 as a result of solvency, according to the 537 small businesses that Iwoca surveyed. (See interview, Credit Management November 2019 issue). More than half of UK reports a decline in financial wellbeing THE COVID-19 crisis has reduced financial wellbeing in the UK and consumers expect a further decline in the next six months, according to a whitepaper published by credit management group Intrum. More than half the UK respondents (55 percent) reported a decline in financial wellbeing over the last six months, higher than the European average of 48 percent. More than a third (38 percent) expect a further decrease. The paper’s findings build on Intrum’s European Payment Report, published in November 2019, which showed that the younger generations and households with children are under particular strain. The COVID-19 pandemic has exacerbated this trend, with 74 percent of UK households with children reporting an income drop as a result of the crisis, compared with 50 percent of households without children. Furthermore, 55 percent of households with children say that after paying their bills they rarely have enough money to last until the end of the month. Across Europe, millennials are more likely to say their financial wellbeing has suffered than other age groups. However, in the UK, 18-21-year olds appear particularly hard hit – with 69 percent saying the crisis has negatively affected their finances, and 38 percent saying they have gone into more debt to cover their everyday spending as a result. Eddie Nott, Intrum’s UK Managing Director, said there is evidence that consumers who are spending less during the crisis are taking the opportunity to settle their debts. “After many of our customers paused their payment plans in March and April, we have seen a significant increase in people contacting us to settle their accounts in May,” he said. “However, many of our customers still need breathing space and are currently unable to pay their instalments. For example, those employed in heavily-hit sectors such as retail and leisure, and vulnerable households with the smallest financial margins, such as families and young people.” There is evidence that consumers who are spending less during the crisis are taking the opportunity to settle their debts. Eddie Nott, Intrum’s UK Managing Director Advancing the credit profession / www.cicm.com / July & August 2020 / PAGE 8
THE CICM THINK TANK > THE NEWS IN BRIEF AS lockdown eases and businesses begin to reopen, concerns are mounting about how to return to a normal world. This topic was at the forefront of the CICM Think Tank discussion group, with members agreeing that the world as we know it may not be restored. One member stated that 100 percent of the UK population is spending less money, noting that we will find it hard to recover unless the population resorts back to their spending habits once lockdown is lifted. Another member believes that REQUESTS FOR PAYMENT PLANS ‘SKYROCKET’ WHILE most people think of COVID-19 as a setback, there is an upside. Customers have been settling their debts. A recent article in The Guardian newspaper suggests that UK consumers have repaid £7.4bn of debt during the lockdown, and it proved to be a hot topic of debate at the latest CICM Think Tank. Most agreed that when spending is restricted, and money saved, there is a propensity to settle one’s debts. One member of the Think Tank discussion noted that there has been a 200 percent increase in repayment plans during the lockdown, with another member agreeing and saying that payment plan requests have, in their words, ‘skyrocketed.’ FINISHING the CICM Think Tank discussion on a high note, the panel talked about the positives that are coming out of the lockdown for those in the credit industry. One member noted that they are being more assertive towards client demands and in return, clients are being more receptive, which is making a huge difference when it comes to saving money within the business. In unison, members agreed that the lockdown has provided them with Plus Ca Change? the population will be split in half, with 50 percent returning to ‘normal’ and the other 50 percent being too terrified to leave the house. “COVID-19 has moved us into a world that can fully operate online, which will see more people working from home, and less money being spent on food, drinks and travel,” he said. With worries of a recession rising, the Think Tank members concurred that businesses and individuals need to adjust to serve the economy in the new reality. Has COVID-19 ‘helped’ the credit industry? greater staff empowerment and barriers have been broken down between juniors and seniors as whole teams have begun to make decisions which have increased productivity. The lockdown has helped unleash skills within the credit industry, allowing employers to focus on training their employees in all areas of credit management ahead of time. The panel also agreed that team support has grown dramatically, which will be upheld long after the lockdown in a new, team-oriented environment. Payment holidays CUSTOMERS facing temporary financial difficulties due to the coronavirus have been granted almost 1.5 million payment holidays by lenders on their credit cards and personal loans, according to statistics from UK Finance. As at the end of May, 877,800 customer accounts had been given a payment freeze on their credit card. This was an increase of over a quarter (26 percent) since the start of the month, as lenders continued to provide support to those customers with temporary financial pressures due to COVID-19. STOP PRESS Sue Chapple FCICM has succeeded Philip King FCICM as Chief Executive of the Chartered Institute of Credit Management. Sue, who joined the CICM as Director of Strategic Relationships in 2018, has been interim CEO since Philip’s departure to become interim Small Business Commissioner in March. Full report in next issue. Wise counsel LOWELL has made two new appointments to its Group Executive team. Thomas Lingen has joined as Group General Counsel, and Bitte Ferngren arrives as Group Chief People Officer. Thomas joins Lowell from Office Depot Europe in the Netherlands, bringing with him experience of leading legal functions for multinational business across a variety of transactions and industry sectors. Bitte joins the business from Scandic Hotels, where she was Senior Vice President Group HR and Sustainability. Digital surge PHILLIPS & Cohen Associates is reporting a significant surge in online consumer activity via its proprietary Estate-Serve platform during the COVID-19 pandemic. In recent months the business has witnessed a 60 percent increase in usage across its digital platforms and a 321 percent increase in consumer-driven self-service payment volumes. CICM Essentials TO stay up-to-date with all that is happening at the CICM – from qualifications to training, and membership to events – see the weekly e-newsletter CICM Essentials. Advancing the credit profession / www.cicm.com / July & August 2020 / PAGE 9
Page 1 and 2: CREDIT MANAGEMENT CM JULY & AUGUST
Page 3 and 4: 14 CARRY ON REGARDLESS Matthew Godb
Page 5 and 6: GET YOUR CREDIT CONTROL SALARY SURV
Page 7: NEWS ROUNDUP Association adopts pos
Page 11 and 12: INSOLVENCY PRIME STAKE Insolvency P
Page 13 and 14: INSOLVENCY EXCLUSIVE The Moratorium
Page 15 and 16: ASK THE EXPERTS IN this series, we
Page 17 and 18: COMMERCIAL COLLECTIONS PERSONAL ACC
Page 19 and 20: COMMERCIAL COLLECTIONS AUTHOR - Sea
Page 21 and 22: SECTOR COMMENT DINING OUT Has the r
Page 23 and 24: OPINION AUTHOR - John Ricketts FCIC
Page 25 and 26: LEGAL MATTERS AUTHOR - Peter Walker
Page 27 and 28: VIEW FROM THE SEA FRONT AUTHOR - Da
Page 29 and 30: EDUCATION & MEMBERSHIP Which CICM q
Page 31 and 32: Handy Andes are not to be sniffed a
Page 33 and 34: COUNTRY FOCUS France is our nearest
Page 35 and 36: COUNTRY FOCUS AUTHOR - Adam Bernste
Page 37 and 38: Each of our Corporate Partners is c
Page 39 and 40: CAREERS ADVICE STAYING AHEAD Why op
Page 41 and 42: It needn’t be that hard. Imagine
Page 43 and 44: OPINION AUTHOR - Chris Sanders FCIC
Page 45 and 46: PAYMENT TRENDS Data supplied by the
Page 47 and 48: OPINION LADIES FIRST A talk at a La
Page 49 and 50: PERSONAL DEVELOPMENT Making Memorie
Page 51 and 52: HR MATTERS Vicarious Living Indiscr
Page 53 and 54: INSPIRE ME IN THE NEW ERA OF WORK Y
Page 55 and 56: More reasons to be a member Make co
Page 57 and 58: FOR ADVERTISING INFORMATION OPTIONS
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