The British chemicals industry adds about GBP 18 billion of value to the UK economy every year, and it is the largest exporter of manufactured goods. The chemicals segment accounts for 6.8% of UK gross value added manufacturing. Chemicals and chemical products account for about 4.5% of exported goods. Compared to other sectors, business investment is high, at about GBP 4.3 billion in 2017.
The majority of chemicals businesses are mature with a stable customer base, as high entry barriers protect the industries (regulatory requirements and required high capital expenditure).
A large number of chemicals businesses rely on asset-based finance for financing. In most cases, profit levels are sufficient to cover the interest. Bank financing facilities are adequate, and business refinancing does not appear to be a problem.
On average, payments in the British chemicals sector take between 60 days and 90 days.
Payment experience has been very good over the past couple of years, and the level of protracted payments is low.
The number of non-payment and insolvency cases was low in recent years, and this trend should largely remain unchanged this year.
The potential repercussions of Brexit on the domestic economy pose a downside risk for businesses profitability and payment behaviour in the mid-term.
Chemicals is part of a tightly integrated EU supply chain that relies on the friction-free transfer of ingredients and finished products. At the same time, the EU accounts for 60% of British chemicals exports.
Brexit-related uncertainty is clearly beginning to bite as reflected by four consecutive quarters of contractions in all business investment in 2018. The sharp loss of momentum is expected to continue this year.
Should your debtors fail to meet their payment obligations, Atradius Collections can help collect debts without recourse to legal action by telephone and letters.
We always try to obtain payment of debts in full, but we will negotiate to agree on a payment plan or a settlement figure.
In order to support this process in the UK, we must issue a letter before claim, which is the start of the legal process. This is not used in all cases – only in those where the collector considers that the debtor has the ability to pay and needs some strong evidence of our intentions.
In England and Wales, we can issue a copy of the proceedings that will be sent to court in the event that the debtor fails to make payment.
When there is a dispute, we aim to reach an amicable solution between you and the debtor. We do this by analysing all contractual documents (e.g. signed contracts, orders, confirmations, invoices and delivery notes, as well as standard terms previously agreed upon). All investigations are completed with the assistance and agreement of our legal team.
If third-party collections do not yield results, we would consider taking legal action after consulting with you.
Within the UK, there are several different and separate legal jurisdictions: England and Wales, Scotland and Northern Ireland. While in general, creditors can take the same actions in each jurisdiction, there are differences in solicitors, timescales, and costs.
Generally speaking, the first stage of legal action in every jurisdiction is the issuing of a letter before claim (LBC). This is a letter sent to the debtor from the solicitor, informing them that should they not make payment in full, legal proceedings will be commenced.
If the LBC is not successful, there are three main options: county court judgement, full court proceedings – generally a trial, and making a company insolvent, often called winding up. However, in the last option, there is no guarantee that making a company insolvent will recoup any monies.
There are two steps to successfully recover monies in the UK by taking legal action. The first is obtaining a judgment and the second is the enforcing of that judgment.