Export turnover dips in Q1 but up year on year.
Small business domestic turnover decreased by 7 per cent between Q4 2011 and Q1 2012 according to The Cashflow Barometer, a quarterly study by ABN AMRO Commercial Finance. Export turnover for the same period is also down by 9 per cent, confirming a slow start to the year. However, year on year (YoY) export turnover is still up 68 per cent on Q1 2011.
Peter Brinsley, International Manager at ABN AMRO Commercial Finance comments: "These disappointing recent results are reflective of a challenging trading environment and echo the economic picture as the UK falls ‘technically’ back into recession.
"Short-term paralysis fueled by continuing speculation of a double dip recession should now be at an end and small businesses should interpret these figures as a blip and not a trend. Export turnover is still up significantly on 2011 overall and there are growth opportunities available, particularly for bold and agile small and medium sized businesses."
Sectors show mixed performance
Despite quarterly performance falling in Q1, some sectors are still up on the same period in 2011, indicating that they are holding on to performance gains built up over the last few years. Turnover fell, or remained stagnant, across all sectors between Q4 2011 and Q1 2012. The recruitment sector has seen the largest contraction in turnover in this period (11 per cent).
Yet, turnover grew slightly YoY in the services (1 per cent), engineering (0.5 per cent) and recruitment (1 per cent) sectors. The manufacturing and distribution sectors have seen consistent turnover decline YoY, with a fall of 5 and 6 per cent respectively.
"The ability of UK manufacturers to tap into global demand rather than sticking to the domestic market alone has been an important source of growth but many of these businesses will now be feeling the effects of the unstable Eurozone and a reduced demand from Europe, the US and Asia. Such businesses should focus on maintaining cash flow to ensure they can keep things ticking over," Brinsley says.
Payment times fall
Despite shaky performance, invoice payment times have actually fallen for domestic and export customers. Export payment times fell from 63 days to 60 between Q4 and Q1, while in the domestic market, this decreased on average by 1.5 days.
The most significant reduction across all sectors was seen in manufacturing, where payment times fell from 61 days to 60 between Q4 and Q1 and 64 days to 60 YoY.
"Late payments are a persistent headache for businesses so it’s great to see this small positive shine through the otherwise gloomy economic forecast," Brinsley continues.
"For exporters in particular, late payment can be a major hurdle inflated by problems with time zones, language barriers and lack of knowledge ‘on the ground’. Businesses need the education and financial confidence to overcome these challenges and make the most of opportunities in the current economic climate."
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