Join CCRInteractive: the Big Debate – from just £200!

CCRInteractive – The Big Debate:
11 October 2018, The Grange St Pauls Hotel, Central London

As you will hopefully be aware, CCRInteractive: the Big Debate will shortly be bringing us a Revolution In Events on Thursday 11th October at the Grange St Paul’s in central London.

The world is changing and so are we. We have listened to the industry and some key issues have arisen from your the feedback on events in the credit industry:

♦ Tired of hearing the same speakers.
♦ Tired of listening to the same subject matters.
♦ Tired of sitting in a room waiting to hear the one good speaker that interests you.
♦ Tired of not getting an opportunity to ask real questions.
♦ Tired of not having a real discussion.
♦ Can’t take a full day out of the office.
♦ Not enough opportunity to network.
♦ Too expensive.

So this is why we are changing to an entirely new format: giving you the opportunity to debate the key issues with your peers, to work towards a solution. 

To find out more about attending CCRInteractive, please contact Alison Lucas at alison@ccrmagazine.co.uk.

CCR has always been about networking, bringing people together, and over the last 3 years we have run over 30 Round-Tables with more than 500 attendees, which have been a great success. So this year we are running a conference which is a series of Round-Tables.

It promises to be an outstanding day of networking and learning, where You will be able to raise the issues and questions that You want, to make sure that You have all the questions answered that You need.

The day will be split into a series of round-table debates (subjects listed below) which will run just like our successful range of debates that we hold throughout the year: each debate will have a Chair and a list of Guide Questions, but you will also  be very welcome to raise any comments or issues that you want to the group.

You can buy any number of debate-sessions that you choose – if you want to come to 1, 2, or 3 yourself; of if you want to buy 5 or 6 debate-sessions and share them around yourself and your colleagues.

The more debate-sessions that you buy, the better the price is  The day is intentionally being set at an affordable price, to encourage participation:

♦ For a Creditor, 1 debate-session is just £200, 2 just £300, 3 just £400, 4 just £500, and so on.
♦ For a Supplier, 1 debate-session is just £275, 2 just £375, 3 just £450, 4 just £575, and so on.

I really hope that you will want to join us. Please do let me know if you would like further information. As promised, here is a list of Round Table debate areas that we will be covering, just book the one or ones that are of interest to you and your colleagues:

1, Data sharing: credit circles and agencies.
2, Analytics and technologies.
3, SMEs, export and credit insurance.
4, Fraud and cybercrime
5, Control or Commercial
6, Preparing a Credit team for Brexit
7, Vulnerability
8, Having the collections policies and technologies you need.
9, What role does risk-assessment play
10, Ensuring your DCAs share your values.
11, Working with the regulators.
12, The big compliance debate.
13, When to sell debt and who to choose.
14, Collecting public sector tax and debts.
15, Marrying internal and external data.
16, The role of technology.
17, Establishing and renewing procedures.

Come and have your say, discuss issues that matter to You, with people You want to meet: Your peers, ready to share their Knowledge with You!

If you want to run your own Round-Table Debate where you choose who comes and the key discussion points, then please call Gary 07785 268404 or email him at gary@ccrmagazine.co.uk.

I&E online research

Readers’ view are being sought on the value and convenience of income-and-expenditure assessments (I&E) as part of a major research project being run with Qualco.

To take part in this survey, please click here (all answers will only be reported in aggregate).

I&Es are extensively used within the industry as a way of assessing the financial situation of a customer, but there are major questions around how and when to carry them out in full.

Stephen Kiely, editor of CCRMagazine, said: “I&Es are certainly an important tool, but there seems to be little common thinking over when it is important to do a full assessment, and how the information should be recorded.

“And now there are several interesting initiatives being considered that might allow for some form of sharing of the information, which could potentially have the significant benefit that the customer would not subsequently need to go through the same conversations repeatedly.

“So it is an interesting topic and I hope that readers will want to give us their views through the online survey and round-table debate later in the year.”

 

Corporate debt hotspots bubbling under a calm surface

A positive global trend to strengthen corporate balance sheets and reduce gearing is masking a rise in leverage in vulnerable sectors and regions, creating hotspots of increased risk for cross border trade, according to the world’s leading trade credit insurer Euler Hermes.

The findings come as Euler Hermes publishes its latest research on global corporate debt, which examines the net gearing ratio (or ‘leverage’) of non-financial, listed companies*. The research covers only those businesses with net debt on their balance sheet and excludes those with net cash, giving a precise view of change amongst indebted companies.

Despite a general rise in global debt, the average net gearing ratio for businesses fell to 53% in 2017, down 3.2pp year-on-year. The trade credit insurer says the positive picture has been supported by strengthening balance sheet structures supported by sustained earnings growth.

Maxime Lemerle, Head of Sector Research, Euler Hermes, said: “An abundant lake of liquidity is supporting high levels of corporate debt globally. But, thanks to strong earnings growth, net indebtedness has been largely kept in check. However, diving under this calm surface reveals some bubbling hotspots of potential risks both for companies and their suppliers in number of sectors and regions.”

The research highlights areas of significant risk and divergence from the global average of 53%. Euler Hermes found that risk is concentrated in sectors that face structural change, notably disruption from climate change, digitalization, changing customer needs or challenging economic performance. The sectors most at risk include paper, transportation and textile, and businesses are increasing leverage to see themselves through challenging conditions and respond to these changes.

From a regional perspective, the research found that Southern Europe was particularly vulnerable to over-leveraged corporates. Portugal (96%), Turkey (72%), Spain (68%) and Greece (69%) all recorded the highest net gearing ratios. This is compared to the lowest average levels found in South Africa (38%), Australia (41%), Hong Kong (42%), Poland (43%) and the UK (43%).

Catharina Hillenbrand-Saponar, Sector Advisor, Euler Hermes, added: “When pressures mount companies can allow leverage to creep up to help manage the problems. If this can’t be matched by earnings growth it may make them more vulnerable to the very issues they are trying to contain or other, unexpected shocks.”

High risk sectors

Paper
The paper industry is a highly capital-intensive industry and requires considerable leverage. As it tackles structural challenges of digitalization, the issue is compounded and has led to the sector recording the highest average net gearing ratio, at 172% for the top 25% (top quartile) comprising the highest leveraged constituents. According to the research, net gearing reduced by 7.6pp for 2017 against 2016 levels.

While leverage is high and energy input price pressures remain, margins should still improve by 20 bps in 2018 as demographics and consumption patterns boost growth in tissue and packaging production.”
Transportation
The transport industry is exposed to considerable structural change and has little financial cushioning to weather the risk. With 144% average net gearing for the top 25% of companies, leverage is high, while cashflow is weak. The industry is facing the challenges of rising oil prices, a need to invest in new technology and fleets to drive fuel economy and meet climate change regulations.

Textile
Textile is a high-risk sector with a combination of significant leverage, 144% in the highest quartile of indebted companies and weak cash generation. Intense competition is the mainstay of structural headwinds, notably for industries in US, Japan, Singapore and India.

Medium risk with great improvement

Energy
Commodity prices have greatly improved earnings and financial structures in the energy sector, even though the outlook for the sector remains challenging. The main risk factors relate to economic and financing conditions. Despite promising market dynamics, the average net gearing ratio is 137% for the top 25%.

Metals
Metals remain a riskier sector with an average 119% gearing ratio for the top 25%. The favorable commodities environment prevails overall, driving earnings and cashflow growth, supported a 4pp net reduction in global net gearing year-on-year. That said, some metal categories affected by protectionism tariffs will be at risk and could see rising net gearing ratios.

Regulation of FinTech must strike a better balance between market stimulation and the security and stability of the financial and economic system

Regulation of FinTech must strike a better balance between market stimulation and the security and stability of the financial and economic system

The EESC believes that the European Commission’s Action Plan is a good basis but that additional measures are needed to tap the full potential of financial technology and to ensure certainty and protection for all market participants

The measures proposed by the European Commission concerning the development of financial technology (FinTech) within the European financial sector must be adjusted so as to balance market stimulation and the security and stability of the financial and economic system. The overall aim must be to ensure certainty and protection as well as fair and equal market conditions for all market participants. The EESC is strongly convinced that FinTech, in an appropriate legal framework, can deliver benefits to European businesses and their clients, contributing to a more competitive and innovative European financial sector.

“FinTech players should be subject to the same rules as the financial sector, particularly as regards resilience, cyber security and supervision”, said Petru Sorin Dandea, rapporteur for the EESC opinion on the proposals of the so-called FinTech Action Plan. “We must follow the principle of ‘same risk, same rules, same supervision'”, he said. In addition, the Committee is calling for rules to ensure uniform development of FinTech in the EU.

Despite its reservations, the EESC supports the Commission’s action plan. It believes that the plan could be instrumental as regards deepening and broadening the capital markets by integrating digitisation, and that it could serve as a stimulus for small and medium-sized enterprises active in the financial sector, as it can facilitate their access to finance. The action plan could thus contribute to the completion of the capital markets union, Economic and Monetary Union and the Digital Single Market, priorities that are strongly championed by the EESC.

Concerning the right to portability of personal data, the EESC believes that this must be implemented in a manner that is compatible with the new Payment Services Directive (PSD2). This would ensure that a level playing field is achieved as regards access to customer data under PSD2 and the General Data Protection Regulation (GDPR).

The EESC would point out the need to clarify the responsibility of companies offering cloud services as regards protecting the personal data they host. Possible rules should be identified by the Commission.

Further recommendations expressed in the Committee’s opinion concern crypto-assets and the impact of innovative technologies on the labour market in the financial sector. The EESC recommends that the European Commission together with the European supervisory authorities keeps a close eye on the growth and the high degree of volatility of crypto-assets and addresses any issue concerning this matter that could threaten the security and stability of the financial and economic system. As regards the impact on the labour market, the Committee calls on the Member States to design and implement active labour market measures enabling workers who lose their jobs to take up new jobs.

In line with its opinion on the FinTech Action Plan, the EESC strongly welcomes the Commission’s proposals for an enabling framework for crowdfunding. It believes that artificial obstacles should not act as a brake on the new framework. It is therefore calling for even stronger proposals and additional measures. Nevertheless, the Commission proposals would be a major step forward, as they provide new opportunities and more certainty and protection for service providers, businesses and investors.

With regard to stronger proposals and additional measures, Daniel Mareels, rapporteur for the EESC opinion on Crowd and peer-to-peer finance, said: “At least in the initial stages, there should be an even stronger focus on risk aspects associated with crowdfunding operations and markets in order to better identify them or mitigate them where possible and to ensure certainty and protection for all concerned parties”.

Market deregulation would constitute higher risks for investors and could create an uneven playing field with traditional financial service providers. Other areas of tension could be the status of providers and their services and the unclear role of national supervisory bodies.

Apart from that, the coexistence of European and national regimes may give rise to confusion and uncertainty. In order to ensure clarity, additional obligations on authorities and supervisors to provide accurate, easily accessible information for all users or the obligatory use of the “EU label” for service providers could be options.

In its opinion, the EESC also urges the European Commission to (better) address the issues of money laundering, terrorism financing and taxation related to crowdfunding. It questions the limited possibility for subjecting crowdfunding platforms to existing rules on money laundering and terrorism financing and the restriction to finance projects only up to an amount of EUR 1 million.

Finally, the Committee encourages the introduction of provisions to regularly monitor, evaluate and measure the success of the proposed EU regime. Consultations and dialogue with all stakeholders and interested parties would be desirable.

First-time buyer product choice improves but rate increases mean mortgage costs go up

A concerted political focus on increasing the number of first-time buyers has resulted in a relatively strong increase in the number of mortgage products catering for such purchases however the growing likelihood of an increase in Bank Base Rate (BBR) has resulted in an increase in costs for this borrower demographic.

The latest findings from the quarterly AmTrust Mortgage Loan to Value (LTV) Tracker show that average interest rates have increased quite significantly for those with either a 5% or 25% deposit, with the former seeing average rates up by 21 basis points and the latter by 12 basis points.

Recent suggestions from the Governor of the Bank of England, Mark Carney, are that the Bank of England’s Monetary Policy Committee (MPC) will vote to increase BBR at its meeting in August, and the AmTrust survey appears to show lenders have already priced in such a rise to their products.

Average fixed-rates for 95% LTV mortgages, according to Bank of England data, have increased throughout this year, up to 3.95%. Average rates for 75% LTV mortgages also increased to 1.74%. While the rate differential between 75% and 95% LTV loans has narrowed slightly to 2.1%, first-timers with only a 5% deposit can expect to pay close to two-thirds more each month and year for their loans.

This means first-time buyers with a 25% deposit will pay on average £20 more each compared to those with just a 5% deposit who will pay £22 more.

AmTrust’s research reveals that the average loan required by first-time buyers has gone up again since the last quarterly tracker in April – up to £125,397 for those with a 25% deposit, and £158,836 for those with a 5% deposit.

The AmTrust Mortgage LTV Tracker reviews the average monthly mortgage payments for first-time buyers on average loan levels, comparing loans for those with a 5% deposit to those with 25%, and looks at the product availability for first-timers.

Given the increase in average rates over the last quarter, AmTrust continues to believe that a BBR increase in August may not immediately feed into lender’s rates as they appear to have made a pre-emptive mood. However, it warns first-time buyers to anticipate a changed environment over the next few years as BBR reaches a ‘new normal’ with further increases likely over the next 12-18 months.

Product numbers continue to fluctuate

The Government’s continued focus on supporting the first-time buyer market has led to an increased interest in the sector, not just from mainstream lenders but also challenger banks and specialist operators.

This has led to the number of product options available to first-time buyers within the last quarter seeing a rise at both 75% and 95% LTV levels, and across both two-year and all product-type options.

The AmTrust LTV survey continues to review the number of actual product options available to first-time buyers with either a 5% or 25% deposit based on the price of an average first-time buyer house from UK Finance figures, the price of an average house as outlined by the June 2018 Halifax House Price Index, and the price of a house at the starting tier of stamp duty land tax, £300k. Below this amount first-time buyers do not need to pay any stamp duty.

In order to do this, AmTrust uses one of the online mortgage search engines which include deals available to both mortgage advisers and direct-only.

The latest research revealed there has been a significant increase in product numbers across both the 75% and 95% LTV options.

Those lucky enough to be able to review 75% LTV options, have access to hundreds if not thousands of products – dependent on type and term – while the options for 5% deposit borrowers have also shown an increase although the choice is unlikely to stray into the hundreds if they want a two-year term.

Lenders continue to aim the vast majority of their first-time buyer product range at borrowers who are able to put down significant deposits on their property. Coupled with the greater costs for 5% deposit borrowers, AmTrust continues to be concerned that only those individuals who can access the Bank of Mum & Dad are able to get on the housing ladder.

It continues to urge lenders to look at options to increase their high LTV mortgage business, for example, by utilising private mortgage insurance to mitigate credit risk and act as a catalyst to drive rates down closer to ‘normal levels’ for lower LTV borrowers.

Pad Bamford, Business Development Director at AmTrust Mortgage & Credit, commented: “This iteration of the AmTrust LTV Tracker is notable for two core reasons – firstly we are clearly seeing lenders getting in their ‘retaliation’ first when it comes to rate increases. The ‘mood music’ around the Bank of England’s MPC suggests that a rate rise is increasingly likely in August and mortgage lenders appear to be jumping before they are pushed.

“In a way this might be viewed as something of a positive as it should not mean a big glut of lenders jumping to raise rates once the announcement is made. However, this is only because rates have been upped over the past few months and there is a strong message to the market here that the days of ultra-low pricing is likely to be behind us.

“There are however clearly positives for first-time buyers – house prices are still high but they do not appear to be moving upwards with any vigour and indeed we’ve seen some falls in certain parts of the UK. With a far greater level of product availability for first-timers added into the mix, and the fact no stamp duty is payable on homes valued at £300k or less, then you could say that prospective new purchasers are in as strong a position as they have been for some time.

“But, and this has remained the case for a number of years, the major obstacle to overcome for most first-timers is still securing the deposit. Even at the 5% level, the average first-time buyer purchasing the average first-time home is still going to need in the region of £9k before they even consider whether such deals are affordable to them.

“Those who want to access the very best rates at the 25% deposit level, and save themselves over two-thirds each month on their mortgage payment, have an even greater challenge on their hands and would need to find over £40k. It is perhaps no wonder that we have real concerns around the ability of would-be homeowners to save this type of money; indeed without the help of family and friends it might seem like an impossible job.

“Clearly £9k is a lot of money but it is far more manageable than £40k, and we do not believe that the price differential between the two should be so high, or that those who can only save a 5% deposit should be having to pay such greater amounts in mortgage payments. This is why we urge lenders to look at other methods in order to increase their supply of products, and appetite to lend, in this market – one of which could be private mortgage insurance.

“Cutting down on the risk is one way to improve the appetite to lend, and while we approve of the increase in product options, this does not always translate into increased lending. The good news is that competition continues to grow, and lenders who might ordinarily not be looking at the first-time buyer market are now much more willing to. If more focus could be trained on high LTV lending then we would go a long way to ensuring far more first-time buyers have a fighting chance of getting on the ladder.”

Consumer car finance market up by 9% in May

New figures released today by the Finance & Leasing Association (FLA) show that new business in the point of sale (POS) consumer new car finance market grew 15% by value and 10% by volume in May, compared with the same month in 2017.

The percentage of private new car sales financed by FLA members through the POS was 89.3% in the twelve months to May 2018, unchanged compared with the same period to April 2018.

The POS consumer used car finance market also reported new business growth in May 2018 of 12% by value and 9% by volume.

Geraldine Kilkelly, Head of Research and Chief Economist, said: “Monthly falls in new business volumes reported by the consumer new car finance market in the first three months of 2018 have been followed by a recovery in April and May, in line with demand for new car purchases.

“The POS consumer car finance market reported new business volumes overall up by 4% in the first five months of 2018, consistent with expectations for the year as a whole.”

Asset finance market reports further growth in May

New figures released today by the Finance & Leasing Association (FLA) show that asset finance new business (primarily leasing and hire purchase) grew by 10% in May, compared with the same month in 2017.

New finance for plant and machinery grew in May by 4% compared with the same month in 2017, while the commercial vehicle finance sector reported new business up by 13% over the same period.

Geraldine Kilkelly, Head of Research and Chief Economist, said: “The asset finance market continued to improve in May after a relatively quiet first quarter. The industry provided further support to the construction, manufacturing and agricultural sectors, with new finance for equipment in these sectors up by 6%, 11% and 22% respectively, compared with May 2017.”

Speed of B2B payments in the Americas declines

The latest results of annual B2B payment practices reserach conducted by global credit insurer Atradius show an increasing level of deterioration in payment practices in the Americas.

  • Average payment duration increased from 61 days in 2017 to 63 days in 2018.
  • On average, 90.3% of respondents frequently experience late payments (the average is highest in Mexico (94.4%) and the U.S. (90.9%).
  • On average 50% of invoices are unpaid by the due date.

David Huey, Atradius President and Regional Director of U.S., Canada and Mexico stated, “It is interesting that in a healthy, growing economy, bad debt continues to plague the B2B markets. To think that 51% of respondents have had a customer suffer bankruptcy or simply close their doors is eye opening. Any business that provides customer credit, domestically or internationally, will benefit from the data reported in the Payment Practices Barometer.”

The average proportion of uncollectable B2B receivables in the Americas declined, though slightly, from 2.1% in 2017 to 1.8% this year. At 2.5%, Brazil is the country with the highest percentage of uncollectable receivables in 2018, mainly because customers filed bankrupty as reported by 54.7% of respondents in Brazil.

The level of intra-regional exports seems to be stable, particularly among the NAFTA countries. This, despite the threat of a protectionist turn by the U.S. and pending the revision of the free trade agreement. Nearly half of the suppliers interviewed in NAFTA countries say that more than 50% of their commercial activities occur within the region, with 16.5% trading exclusively within the current free trade area. Trade with the U.S. either increased or remained stable for 81.5% of the suppliers interviewed in Mexico. In Canada the positive trade picture is even more pronounced with total of 90.3% maintaining the same or better trade levels with the US.

The Conveyancing Association and friends aim to raise £25k for Tŷ Hafan Children’s Hospice

Four members of the Conveyancing Association (CA) Secretariat at Convey 365 – Spencer Cawley, Joel Grant, Morgan Paley and Will Smith – will be aiming to summit the Welsh Three Peaks on the 30th June and, CA Operations Director, Lloyd Davies, will undertake the 5in55 Challenge from the 4th-7th July, summiting five of the highest mountains in the UK in just 55 hours.

The real challenge for the CA is to help raise over £25k for the Tŷ Hafan Children’s Hospice.

Tŷ Hafan is one of the UK’s leading paediatric palliative care charities and provides care for terminally ill children and their families. The hospice needs to raise over £3 million a year from private funding to survive. Tŷ Hafan aims to do everything in its power to make sure that a short life is a full life, as well as caring for the families involved, it aims to create special memories that last a lifetime.

With Tŷ Hafan in mind, the CA Secretariat will attempt to climb the three Welsh peaks of Mount Snowdon, Cadair Idris and Penyfan all within 15 hours. They will join travellers from all around the world to walk a distance of 20.35 miles.

Between the 4th-7th July, CA Operations Director and Chairman of the Conveyancing Foundation, Lloyd Davies, will join a group of Tŷ Hafan Dad’s, supported by uncles, brothers and staff to climb the five highest mountains in the UK in 55 hours. They will be tackling Ben Nevis in Scotland, Scafell Pike in England, and Snowdon, Cadair Idris and Penyfan in Wales.

So far the fundraising which has been achieved this year, in conjunction with the Conveyancing Foundation, Convey Law and Monmouth Rugby Football Club, as well as the local schools and youth clubs involved in the Monmouth Snowdogs Challenge, is just over £23k for Tŷ Hafan.

The fundraising team are aiming to smash the £25k target – to make a donation please visit: https://www.justgiving.com/fundraising/monmouthrfcsnowdogs

The Foundation recently received praise for its charitable work and ingenuity from HRH Prince Charles earlier this year as the prince is the Patron for the Ty Hafan Children’s Hospice.

Lloyd Davies, Chairman of the Conveyancing Foundation and Operations Director at the CA, commented: “We are looking to raise awareness of how conveyancers can raise considerable funds for their chosen charities while engaging with their local communities. The Conveyancing Foundation Free Legal Fee Competition has allowed Convey Law clients to raise over £300k for the Tŷ Hafan Children’s Hospice over the last 10 years.

“Conveyancers who use the competition can choose the charity that they wish to support. We are a zero profit organisation and we are fully committed to helping conveyancers ‘Convey for Charity’. I would like to say a massive thank you to our sponsors at Groundsure, Conveyancing Data Services and Convey Law for helping to support our trekking challenges this year. Thank you all for your generous donations and support.”

Low productivity jobs driving employment growth in many OECD countries

Weak labour productivity growth continues to mark the world’s advanced economies and risks compromising improvements in living standards, says a new OECD report.

In its latest Compendium of Productivity Indicators, the OECD says that the slowdown in labour productivity growth (measured as gross value added per hour worked) has especially affected manufacturing – both high tech activities such as computers and electronics, as well as industries requiring lower skill levels – and that gaps in labour productivity levels between large and smaller firms remain high.

And although economic growth in many countries has led to rising employment, particularly in Italy, Mexico, Spain, the United Kingdom and the US, the majority of new jobs are in activities with relatively low productivity.

The greater number of low productivity jobs has also weighed down on average wages across the economy as a whole. Real wages (adjusted for inflation) fell between 2010 and 2016 in Portugal, Spain and the United Kingdom. Although in some countries, such as Germany and the US, real wages have begun to rise in line with, albeit still slow, labour productivity growth in recent years, in many sectors wages continued to lag labour productivity growth. This was the case in one third of all sectors in Germany and the US.

“The long-term decoupling in wage and productivity growth we see in many OECD countries may also be driving inequalities in income and wealth,” the OECD’s Chief Statistician Martine Durand said. “Slowing productivity growth and the large number of low productivity jobs being created both limit the scope for improvements in material well-being.”

The share of income from economic activity going to labour through wages has declined in most countries in recent years, but most markedly in Hungary, Ireland, Israel, Mexico, Poland and Portugal.

The Compendium shows that by 2016, the latest year for which comparable international data is available, investment, an important driver of productivity growth, was beginning to pick up. However, investment rates, particularly on machinery and equipment and other tangible assets, were still below pre-crisis levels in many OECD countries.

Investment in intellectual property products, such as software and R&D, has been increasing since before the crisis, often at a faster pace than investment in physical capital but significant differences remain across countries. The share of total investment going to intellectual property in 2016 ranged from 1.1% in Colombia to 30% in Switzerland and 56% in Ireland.

The Compendium says the relatively robust investment in intellectual property, where the benefits to business may take time to feed through, may act as a catalyst for stronger economic growth in the future.

The OECD says productivity is ultimately a question of “working smarter” rather than “working harder”. This reflects firms’ ability to produce more output by better combining inputs through new ideas, technological innovations, as well as by way of process and organisational innovations.