Nigel Birney, Head of Trade Credit and Political Risk, Willis Towers Watson
Reacting to today’s PMI figures from Ulster Bank, Nigel Birney, Head of Trade Credit and Political Risk, Willis Towers Watson, has said that businesses should take heed of the warning signs and make sure they are protected:
“This morning’s latest PMI figures for June are extremely concerning. They confirm what we’ve known for some time – that the Northern Ireland economy is in a worrying downturn. The new figures show that exports are down, new orders are down, and manufacturing output is falling at its fastest rate since the recession over a decade ago and Credit Insurance pay-outs are at their highest level since 2009.”
“Brexit uncertainty is, without doubt, a factor but it is clear that the private sector overall is in a weak and perilous state. This survey has shown key industries like manufacturing, retail and construction are experiencing a pronounced slump. This evidence-based report reveals the economic cycle here has now turned after six years of growth.”
“The likelihood is that we’ll now start to see instances of bad debt creeping up as Days Sales Outstanding (DSO) increase across the economy’s key sectors, which puts enormous strain on a company’s cash flow. Business owners need to be confident that their supply chains, suppliers and debtors, are all as risk free as they can be. Now is the time for businesses here to be proactive and take action to protect themselves from harm. Supply chains are always at risk of bad debt and a weak local economy puts businesses and business owners at risk of failure.”
“We advise that small businesses in Northern Ireland either put in place contingency plans or review their existing plans to incorporate Credit Insurance as soon as possible. Having Credit Insurance in place can act as a barrier against business failure and help protect your business from the catastrophic effect of bad debt and supply chain disruption.
“Over 80% of businesses in Northern Ireland fall into the SME bracket. They are extremely prone and exposed to insolvencies and bad debt. Industries like construction are at particular risk and the future of the local sector does not appear optimistic. It is crucial, then, that the businesses that make up the backbone of our local economy insulate themselves from economic volatility and decline.”