CMA Credit Confidence Survey – Q2 2009

Overall, the Q2 survey results suggest no real improvement for trade creditors over Q1, with some performance indicators falling well below expectations set during the first quarter.

The number of companies reporting an increase in credit applications dipped (from 40% to 30%), and a rising number of companies reported a decrease in credit applications, (from 34% to 39%.) These results indicate an overall decrease in the volume of new credit applications in the second quarter. This was followed by a 4% rise in the number of companies reporting a decrease in the number of orders received in Q2. Although the number of companies reporting an increase in the number of orders received remained fairly constant, only a little over less than half of the companies predicting an increase in Q2 (47.5%) actually experienced an increase (26.3%).

36.9% Fewer companies are predicting an increase in orders for Q3, down from (39.6%) than did for Q2 (47.5%). Payments showed improvement in Q2, with a higher percentage of companies reporting an increase and a lower percentage reporting a decrease.

A significantly higher percentage of companies expect no change in payment trends in Q3 (48.6%) than did in Q2 (36.1%), suggesting that the economy has begun to stabilize, but that recovery is expected to be slow.

CMA member responses to payment trends suggest that companies continue to experience the same level of slowing payments, but more companies are reporting on time payments and fewer are extending payments. Fewer companies are predicting payments to be on time and more companies are predicting an increase in slowing payments in Q3.

Credit policies are just as tight as in Q1 and are likely to remain tight into Q3, with few signs of relaxing.

Companies continue to experience significant increases in collection claims, account holds, NSF checks, and repayment agreements, although these increases are not as great as those reported in Q1.

Although 1/3 of respondents still have a confidence level of 7 in their customers’ ability to pay, results show a slight improvement in overall confidence levels 7 and above, from 60.5% to 65.4%.

Credit Confidence Graph

Conclusions:

Overall, credit applications and orders suggest that business is down, and while credit managers might not feel that things will get worse, they are acting as though things will not improve significantly in the next quarter. The level of confidence remains above average, but does not suggest a quick turnaround in the economy.

Q2_2009_CMAsurvey

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