National credit manager survey confirms 2012 was a tough year for creditors; 2013 looking more positive

Sydney, Australia, 20 November 2012: Australia’s credit managers have confirmed that 2012 was a particularly tough year for creditors, with most battening down the hatches and insulating their organisations from potential defaults via tighter lending criteria, shortening payments terms and a tougher line on unpaid accounts. 
Released today the Credit Management in Australia 2012 report from Veda, Asia Pacific’s leading provider of consumer and commercial data intelligence and insights, shows that while companies tightened up their lending practices significantly during the year, there was optimism that 2013 will be a better year, with business sentiment improving, credit applications rising and the introduction of the Personal Property Securities Register (PPSR) having a positive effect on their business.
The report aims to detail the effect economic conditions and business sentiment had on credit management practices throughout Australia during the year.  The online survey of more than 250 firms polled organisations that had between 500 and 10,000 customers operating on a national basis and employing more than 100 people.  These entities operated across a wide variety of industry sectors, including construction; finance and insurance; transport and storage; wholesale trade, etc.  Survey participants had an average 20 years of experience in credit management.
“Participants observed an increase of 11 per cent in bankruptcies and external administration and customer payments had deteriorated during the past six months for 53 per cent of participants,” said Moses Samaha, General Manager, Commercial Risk at Veda. 
“The outlook for 2013 is looking better, with credit criteria appearing to loosen within the next six months, credit applications increasing and a decline in the gloom around economic conditions having a negative impact on their organisations.
“Nevertheless, it is still imperative that credit managers ensure they have the right tools and processes to assess and monitor the level of risk in their customer portfolio, with recent Veda analysis showing that organisations can get up to four times greater visibility into possible adverse customer behaviour by looking at both commercial and consumer data for the company, its directors and their related entity interests.”
The report’s key findings were:

• Business sentiment appears to be improving, despite economic conditions having had a negative impact on 59 per cent of businesses compared to 74 per cent in 2011
• The number of credit applications rose  for 32 per cent of credit managers and remained the same for 53 per cent of credit managers
• Credit managers have adopted stricter lending criteria which may loosen in the next 6 months
• 51 per cent of participants will accept a credit application if an adverse is present compared to 31 per cent in 2011
• Offering 30 day payment terms has reduced from 80 per cent in 2011 to 36 per cent of businesses, with a greater shift to shorter terms
• 62 per cent of participants feel the introduction of PPSR has benefited their business
• A high percentage of credit managers will suspend or cancel a continuously unpaid account and there appears to be a decline in the lodgement of defaults compared to 2011
• Customer payments have deteriorated in the last six months for 53 per cent of participants
• Visibility on external administration has risen by 11 per cent since 2011
• Fewer credit managers are reporting a decline in Days Sales Outstanding (DSO) activity with the average DSO at 43.22 days