The latest Lloyds Bank Business Barometer – reaction

The Lloyds Bank has released its Barometer today. Key statistics show:

  • Overall business confidence improved for third consecutive month, up eight percentage points to -14%, but remained well below the long-term historical average.
  • Trading prospects for the next 12 months rose nine percentage points to -14%, the largest monthly increase for three years.
  • The retail sector had higher percentages of firms reporting a negative impact on demand at 64%.

Edward Thorne, UK Managing Director at data and analytics firm, Dun & Bradstreet said: “SMEs are the driving force of the UK economy, making up the majority of the UK’s private sector. The latest barometer results and continued increase in business confidence is positive news after a turbulent six months for many companies. Despite signs of recovery, it remains a challenging time for many businesses with the latest data from Dun & Bradstreet suggesting that payment performance is worsening.

“Our trade payment data shows the percentage of bills paid on time has dropped since March, from a UK-wide average of 47.2% to 41.6% in July, signalling a worsening trend. This is even more alarming for the retail sector, with the latest data for Q2 showing a deterioration in payment performance (-1.4 percentage points) for the period of April to June. Although there has been a fall in liquidations during the same period for the retail sector, as well as other industries due to changes to UK insolvency law and government support schemes, these figures are expected to rise as the full impact of the pandemic becomes clearer and filing requirements return to normal.

“Late payments critically affect the health of a business; UK companies spend 56.4 million hours looking for overdue payments and a survey commissioned by Dun & Bradstreet found that nearly half of SME respondents felt that overdue payments put their business at risk of failure. With the Government’s furlough scheme concluding and the end of the Brexit transition period getting closer, it’s a crucial time for SMEs to effectively manage their cash flow while assessing the impact of the pandemic on their future growth. By using data and predictive analytics to gain a detailed understanding of the previous payment behaviour of customers, however, as well as establishing a view of future performance, businesses can mitigate the potential impact that late payments can have on their cash flow and plan accordingly.”