Credit Management March 2020

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THE FUTURE WORLD OF WORK IS NOW Request our latest What Workers Want Report Hays Credit Management would like to congratulate all nominees, finalists and winners at the British Credit Awards 2020. Automation has the potential to transform the credit management function, allowing professionals the time to focus on delivering more strategic tasks. But how can employers prepare for and capitalise on the opportunities offered by greater automation in the workplace? The Hays What Workers Want Credit Management Report provides insights into how digital transformation and automation is impacting jobs, tasks and skills within credit management – and how employers can reap the rewards of the successful implementation of these technologies. Request your copy of the report to find out how you can prepare for increased automation in the workplace and realise the most from your workforce today. Register your interest and be one of the first to receive our report at hays.co.uk/credit-report hays.co.uk/credit-report © Copyright Hays plc 2020. HAYS, the Corporate and Sector H devices, Recruiting experts worldwide, the HAYS Recruiting experts worldwide logo and Powering the world of work are trademarks of Hays plc. The Corporate and Sector H devices are original designs protected by registration in many countries.All rights are reserved. Advancing the credit profession / www.cicm.com / March 2020 / PAGE 22
SECTOR FOCUS POWERING DOWN Is the energy sector showing signs of slowing down? AUTHOR – Tim Vine THE UK energy sector has undergone considerable change in recent years. As demand for environmentally friendly alternatives grow in popularity, and businesses face greater scrutiny and hardship thanks to the economic uncertainty caused by Brexit, the sector dominated by the ‘Big Six’ is showing signs of pressure. The growing demand for renewable energy and environmentally conscious providers means that the energy sector has seen explosive growth; Dun & Bradstreet’s data has shown that the number of businesses in this sector increased by 36 percent between October 2016 and October 2019, from 10,222 to 13,911. However, as regulators increasingly scrutinise energy companies to ensure prices are affordable and competitive, risk across the sector may be set to worsen in 2020. INCREASING LIQUIDATIONS Where the sector has seen the number of providers greatly expand, there has also been a significant growth in liquidations. Breeze Energy ceased trading in December, making it the ninth energy supplier to collapse in 2019 alone, and the fifteenth in two years. Even worse, the number of liquidations has increased from 26 in 2016 to 39 in 2019. What’s more, the industry is undergoing drastic change with smaller energy companies struggling to adapt to external pressures and finding themselves on the periphery of liquidation. As the Office of Gas and Electricity Markets (Ofgem) said last year, the growth in the number of suppliers means that it now expects there to be a period of consolidation as providers exit the market or merge. Complicating the market conditions further is fossil fuel consumption, which has reached an all-time low. Meanwhile, Ofgem has cracked down on the price of energy in the UK, meaning it is a difficult space for companies to thrive in. This matches data from the Purchasing Managers’ Index, which showed that the services sector as a whole contracted throughout 2019, with new order inflow declining and jobs being cut. Finally, following the analysis of selected payment information, prompt payment performance in the sector appears to be below the UK average, with 39 percent of payments analysed being made on time. This indicates that the sector is struggling to pay partners and suppliers, partly due to the unreliability of customer payments and the difficulty of being able to accurately measure energy consumption. SWITCHING ON In December, Ofgem announced plans to limit the profits of energy providers in order to push them towards investing in carbon-neutral technology, and consumers more broadly are turning to providers that continue to invest in new, environmentally friendly methods while keeping down the cost of their energy bills. What this means for the market is that smaller providers may continue to struggle to remain competitive while also making these investments, speeding the consolidation of the market and ensuring that the ‘Big Six’ retain their positions as the UKs largest providers. As new competitors continue to enter the market at pace, and technological innovation inspires enhanced products and services, energy suppliers need to adapt quickly in order to retain customers and customers’ trust. However, the capabilities needed to adapt for the future market – such as being customercentric, innovative, digitally advanced and operationally excellent – are not those traditionally associated with the utilities sector. With an unstable global economy, and the complications of a post-Brexit world, it will be a crunch year for the sector as it looks to shake off the business failures that have marred it over the past two years. Tim Vine is European Head of Finance Solutions at Dun & Bradstreet. Tim Vine As new competitors continue to enter the market at pace, and technological innovation inspires enhanced products and services, energy suppliers need to adapt quickly in order to retain customers and customers’ trust. Advancing the credit profession / www.cicm.com / March 2020 / PAGE 23
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Page 17 and 18: INTERVIEW WATCHING BRIEF Sean Feast
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Page 27 and 28: OPINION Silver Service Insolvency a
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Credit Management March 2020

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