Research suggests sector set will remain under pressure
The manufacturing sector experienced something of a recovery during the first half of the year, but figures released this week (1 October) show productivity is at a ten month low and suggest the sector may be facing tough times.
The research, conducted by Markit/CIPS shows that recovery in the UK manufacturing sector is stalling with new export orders also slowing down for the first time since July 2009.
As the months ahead look uncertain for firms of all sizes, it is essential for management teams to protect revenues as much as possible.
Manufacturing companies are often just one link in a lengthy chain which encompasses suppliers, wholesalers and retailers. Therefore the risk of suffering bad debt is intensified by the number of businesses involved.
Since the Government’s Trade Credit Insurance Scheme ended in 2009, credit insurance has become a vital means of indemnifying business owners against loss of earnings as a result of a customer’s credit problem or insolvency.
In keeping with this, figures from Lloyds TSB Commercial Finance show that its debtor insurance product is becoming increasingly popular with manufacturing firms, with over 20 per cent of new policies being taken out by businesses in this sector.
Martin Walmsley, head of debtor insurance at Lloyds TSB Commercial Finance, said: “The manufacturing industry is the heart of the UK’s economy and central to the country’s economic recovery. Therefore it is vital that management teams take all possible measures to protect themselves against the potential effects of bad debt.
“Unpaid invoices can have a catastrophic effect on a company’s cash flow and in these uncertain economic conditions, businesses should consider measures, such as credit insurance, which safeguard capital and gives them the confidence to target new opportunities and put in place long term expansion plans.”