According to the latest Business Credit Index, published by the Credit Management Research Centre (CMRC) at Leeds University Business School, the early signs of financial stress in the corporate sector are late payments and bad debts. As the credit crunch bites, Professor Nick Wilson of the CMRC said: “The late payment indicators show deterioration in payment behaviour and a higher incidence of bad debts. However, the recent signs of financial stress are signaled by the numbers and values of county court judgments against companies.” The Business Credit Index shows the number of companies being successfully sued in court for non-payment of bills has rocketed - a sign that the economic slowdown and credit crisis are forcing firms to break the law. In some sectors, such as retail, property, transport and business services, the number of county court judgments had increased "fivefold" over the past two years. The rapid rise has prompted the CMRC to predict that insolvencies will rise by "more than 20pc" in the next two years to the highest level since the dotcom bubble burst in 2001. "Firms are under pressure,” said Professor Wilson. “Given that the majority of businesses in the UK are small to medium enterprises which are already struggling with tighter bank lending policies the prospects for a significant rise in corporate insolvencies is now a reality as the late payment of commercial debt continues to increase.” The forecast is supported by a recent study from accountancy firm BDO Stoy Hayward, which revised its insolvency forecasts for the second time this year from a 12pc to an 18pc rise in 2008 and warned that no sector would escape the economic downturn. Other findings in the report include: • Late payment confidence among UK businesses remains at its lowest point for the last five years. • Payment from customers beyond the due date has remained stable at 17.3 days in the last quarter • Manufacturing companies suffer the longest late payment deals with an average of 22 days overdue. • On average debts are being settled after 49 days although manufacturing companies tend to suffer the longest total collection period at 54 days. • Medium-sized businesses currently have the longest collection period of 55 days, which is ten days longer than small-sized firms in the sample. -ends- For further information contact: Professor Nick Wilson tel: +44(0) 113 343 4472 or visit the CMRC website at www.cmrc.co.uk For further information contact: Ian Green, GREEN Communications Tel: 0845 4503210 Mobile: 07855 341283 email: ian@greencomms.com Liz Hirst, GREEN Communications Tel: 0845 4503210 email: liz@greencomms.com Guy Dixon, University of Leeds media relations Tel: 0113 343 4031 email: g.dixon@leeds.ac.uk Editors Notes Leeds University Business School is among the leading UK university-based business schools and continues to grow in size and reputation. The school is full-range, teaching more than 1,500 undergraduate and 500 postgraduate students from more than 50 countries. It has its own faculty and its own high reputation for research. Leeds University Business School also has a history of successful partnerships with industry and commerce at local, national and international levels. Members of the Faculty are at the forefront of major developments in basic and applied research across the fields of Business, Management, Accounting, Finance and Economics. Senior staff have held leadership positions and committee membership and advised major policy-making bodies and learned societies. These include the Academy of International Business, the Academy of Management, the Economic and Social Research Council's Training and Development and Research Grants Boards and the British Academy of Management. Key achievements for Leeds University Business School include: • Leeds University Business school is ranked ranked 48th in the world's top 100 business schools (source: Financial Times Global MBA 2008) • Ranked 52nd in the world (Which MBA? Economist 2007) • International Business at LUBS ranked world’s number one for research, number seven for teaching • Ranked 13th equal for Business Studies (The Times Good University Guide 2007). • EQUIS and AMBA accredited. • CIPD accredited and ESRC recognized. The University of Leeds is one of the largest higher education institutions in the UK with more than 30,000 students from 130 countries. With a turnover of £450m, Leeds is one of the top ten research universities in the UK, and a member of the Russell Group of research-intensive universities. It was recently placed 80th in the Times Higher Educational Supplement's world universities league table and the University's vision is to secure a place among the world's top 50 by 2015.