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An increasing number of credit managers are expecting future economic conditions to have a positive impact on their business, according to a new Equifax survey.
Equifax’s latest National Credit Managers Survey has revealed that 58 per cent of respondents said they believe future economic conditions would have a positive impact on businesses, up from 56 per cent in 2017.
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According to the research, which involved a survey of 302 credit managers, competitive influences continue to be strong, with one-third (33 per cent) of credit managers reportedly experiencing pressure to extend credit even when adverse information was present, and with 45 per cent of them pointing to the need to increase sales.
Further, the majority (60 per cent) of credit managers said that they experienced an increase in credit applications over the past 12 months, compared to 37 per cent in 2017, with 12 per cent experiencing a fall.
Reflecting on the results, Neil Shilbury, general manager, commercial and property solutions at Equifax, said: “We’ve seen a significant swing towards optimism from credit managers, both when considering broader economic conditions and individual portfolio management.
“The optimism isn’t surprising when viewed against the backdrop of the macroeconomic climate. Business confidence is favourable, unemployment continues to trend downwards, and GDP is edging higher. In addition, interest rates remain low despite some slight upward movements, and concerns around the potential severity of the property downturn may have subsided. Positivity among credit managers reflects these factors.
“The only dark spot for credit managers is the increase in competitive pressure, which seems unlikely to abate in the near future. In a strong market where credit losses are low, it can be harder for credit managers to refuse applications and protect their business from bad debts.”
Moreover, Equifax has claimed that the optimistic outlook among credit managers has led to a reduction in collection activities, with the survey finding that fewer organisations have increased their collections activity (27 per cent), compared to 66 per cent in 2017.
The research also revealed that fewer organisations have tightened their credit activity: 23 per cent in 2018, compared to 49 per cent in 2017.
Additionally, 27 per cent of credit managers said that they plan to tighten collections activity in the coming 12 months, compared to 61 per cent in 2017, and 22 per cent plan to tighten credit activity, compared to 53 per cent in 2017.
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