The UK’s Transport sector was hit by a huge increase in bad debts owed to it during Q2 2017, with unrecoverable debt rising by 178% from £2.6m to £7.4m. The average amount of each debt also spiralled, rising from nearly £7,800 to over £19,000. At the same time, however, debts owed by the sector to suppliers also mushroomed, growing by 161% from £13.3m to £34.8m.
The figures have been released today in the Creditsafe Watchdog Report, which tracks quarterly economic developments across the Transport sector in addition to 11 other sectors (Farming & Agriculture, Construction, Banking & Financial, Hospitality, IT, Manufacturing, Professional Services, Retail, Sports & Entertainment, Utilities, Wholesale).
The growing bad debt problem in both directions came despite the sector having a strong quarter in terms of sales. Revenue grew by 4.1% to £201.4bn between April and June. Of the four industries analysed by the Creditsafe Watchdog Report, Construction and Manufacturing saw falls while Retail was virtually unchanged.
Other positive aspects for the transport & logistics industry were a 11% drop in the number of business failures (falling from 133 to 119) and a drop of over 40% in companies having a CCJ against them (down from 1,471 to 843).
Rachel Mainwaring, Operations Director at Creditsafe, commented: “It is concerning to see such large rises in bad debt in the transport sector. Whilst the amount of bad debt owed to the sector is lower in real terms than some other sectors like construction, nevertheless to see such a spike raises questions about credit health. The almost equally large rise in bad debt owed by the sector is not encouraging either. In what remains a challenging economic climate, effective cash management is essential to protect margins. It’s something the sector will want to monitor its performance on closely in the coming months.”
