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Independent research has found that clients of Coface UK, a leading provider of credit solutions for business, are more likely to be granted trade credit from their suppliers and to receive preferential credit terms than the average UK firm.

The research, conducted by the Credit Management Research Centre, asked financial directors and credit professionals from businesses in all size bands and regions of the UK their views on credit management. The survey included a sample of Coface UK’s clients as well as companies from the wider business population. The research revealed that 95% of Coface UK’s clients receive trade credit from their suppliers, compared to a national average of 91%.

In addition, 50% of Coface UK’s clients stated that they often receive preferential credit terms from suppliers with whom they have a long-term relationship, compared to just 39% of the wider business population. 

The survey also highlighted that Coface UK’s clients are more likely to perceive credit management as making a contribution to profits, with 68% stating it is important or very important, compared to 52% of all firms. It therefore unsurprising that Coface clients are also more likely to check the creditworthiness of prospective customers, to set credit limits and to review terms and conditions regularly.

Dominique Vaughan Williams, director of marketing from Coface UK, comments: “The research illustrates that, as you ‘d expect, Coface UK’s clients, because they are already using one of our services of credit insurance, collections management, receivables financing or credit information, are more aware of the advantages of credit management and have stricter procedures in place than the average UK business. However, the fact that Coface UK’s clients are given better access to trade credit from their suppliers and enjoy preferential credit terms compared to other businesses, highlights the positive perception and additional benefits of being supported by a credit solutions company.”   

Delayed settlement compensation from loans body The Loan Market Association, the trade association representing banks and other interested parties involved in the primary and secondary Euroloan markets, has introduced delayed settlement compensation as an option into its Par Trade Confirmation document.

A buy-in/sell-out concept will be introduced simultaneously, which will serve as a mechanism for enforcing delayed settlement compensation. The option will only apply to performing assets and it will only be possible to exercise it if all the other terms of trade have been fulfilled.  The LMA standard terms and conditions for par trade transactions have been amended to accommodate the new option, and this document, as well as the amended trade confirmation, is now available to LMA members.

Gary O’Connor, LMA director and chairman of the valuation and trading practices committee says: “The LMA continually seeks to ensure that its recommended documentation and guidelines reflect the wishes of the market participants overall. The issue was debated at length and, on balance, we felt it was appropriate to introduce delayed settlement compensation as an option. The key issue was common agreement that the on-risk party should be rewarded on a timely basis, and the new option provides a mechanism to ensure this happens. I should stress that the concept is optional and it will be up to individual parties to a trade to decide whether or not to include the option in the trade terms. Our intention will be to review the market experience of the new option in the short term.”