ICSM News Update: China Crisis threatens new Credit Crunch; energy firms collapsing; and ICSM’s data ‘spring clean’
Those with long memories will recall the Credit Crunch of 2008 and its long term effect on the economy may not be happy about another potential one.
This time it’s not sub-prime mortgages taking down the banks but one of China’s largest companies Evergrande on the brink of collapse.
Ian Carrotte of ICSM said: “In business you need to be one step ahead and take action before the cold winds of recession occur. Evergrande is a massive concern in China with a real estate portfolio worth billions. The problem is they owe more than £250bn and cannot service their debt to the Chinese and international banks. And there’s the rub. If they go down the banks could collapse at the worst or at the best stop lending – and that includes our own banks who would be affected. In past recessions banks have called in loans and ended overdrafts as they try to stay solvent. So the advice is if you are thinking of taking out a big loan – have a long hard think.”
Evergrande's stocks fell in value by 80% this year but have rallied recently after they struck a deal over repayments with lenders. However the jury is still out on whether they can survive without intervention from the Chinese Government.
The BBC reported that Evergrande was founded by businessman Hui Ka Yan in 1996 in Guangzhou, southern China. It owns more than 1,300 projects in more than 280 cities across China.
Lights going out
ICSM has reported in the past on the alarming numbers of energy firms that have gone bust in the last two or more years. This year alone Simplicity Energy, Green Network Energy, Hub Energy, PfP, MoneyPlus, Utility Point, People's Energy and Bulb Energy have all collapsed as prices have continued to hike cutting affordability and profit margins.
Ian Carrotte of ICSM said: “Global demand has seen wholesale prices rise forcing around 20 energy firms out of business in the last two years or so. If you have a factory or large offices that rely on gas for heating or power, then it’s an overhead that could double in charges by next Easter. That can create major cashflow issues. Although you shouldn’t lose money if your supplier goes bust as you are automatically switched to a new company – but if you are in credit then you are effectively lending these energy companies an interest free loan. The tip is to keep an eagle eye on the meter and not to allow the energy firm to keep taking your cash so you are in credit. No other business – bar the utilities – do this.”
The latest firm to get into trouble is Bulb who are the nation’s sixth largest energy suppliers. They have been reported as being in crisis talks with lenders while Igloo have major problems opting to stop taking on new customers and freezing sales activities. Avro Energy and Green ceased trading in late September leaving their 830,000 combined customers facing higher tariffs from a new supplier given them by Ofgem.
ICSM strongly advises suppliers to all energy firms to think hard about giving more credit as they may not get paid if the predicted collapse down to a rump of companies happens.
ICSM’s data ‘spring clean’
ICSM retains information on behalf of its members on a wealth of interests relating to business so at any one time they can access information about the credit details of UK businesses. As time has gone on the amount stored has grown and grown to the point that it’s necessary to have something of a ‘spring clean.’
Data that goes back to the last century will soon be archived separately from the main information base available to members on the ICSM website.
Ian Carrotte said: “We will be organising a “’Spring Clean’of our archive data servers in order to free up vast amounts of data archives and will be removing all saved reports from prior to 1st January 2020 unless anyone has a need to retain those reports. If so, please let us know and we can discuss archiving data from prior to that date. Drop me a line on 01454 322234 or email me at ian.carrotte@icsmcredit.com and I’m sure I can help with any issues.”
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk