Delinquent balances rise as share of delinquent accounts declines
ATLANTA, Sept. 20, 2012 /CNW/ - Average delinquent balances of Canadian businesses rose substantially over the past eight quarters ending in March 2012, according to findings from a new Equifax study of business-to-business lending presented at its Equifax 2012 National Credit Conference in Montreal. "The Canadian economy is still trying to find its way in the post-recession world," said Equifax Chief Economist Amy Crews Cutts. Business-to-business lending encompasses the activity of small and medium businesses, and is an effective indicator of the nation's credit health.
"Headwinds remain for small and medium sized businesses," said Cutts, "Normally after the jobs start returning we see delinquency rates fall, and balances at-risk decline too. This is not exactly what's happening three years into recovery." Delinquent balances are rising among all timeframes: early- (30-59 days past due), mid- (60-89 days past due) and late- (90 or more days past due) stages. Since the second quarter of 2010, according to Equifax data analysis, specific increases include:
- Average early-stage delinquent balances are up 35 percent
- Average mid-stage delinquent balances are up 19 percent
- Average late-stage delinquent balances are up 116 percent
"The good news is that total business-to-business owing is up; so B-to-B credit is becoming more widely available and companies are able to grow," said Cutts; early and mid-stage business account delinquencies have fallen for two quarters now – I am hopeful that this is an indicator that the Canadian economy is poised to transition soon from recovery into growth."
Delinquency rates, measured as a share of reported accounts, have held fairly constant over the past 8 quarters, but the recent trend is down. As of the first quarter of 2012:
- Early-stage delinquent rates have declined for two consecutive quarters to 35.5%
- Mid-stage delinquent rates also declined for two quarters, and now stand at 15.5%
- Late-stage delinquent rates have declined for only one quarter and are at 16.3%
The wholesale and manufacturing sectors consistently have had the largest average past due credit balances over the past eight quarters. At March 31, 2012, the wholesale and manufacturing sectors both ended with average past due account balances at nearly $23,000. The government and transportation sectors have had the lowest average credit delinquencies, both ending the first quarter of 2012 at approximately $2,000.
The Equifax findings also show that dollar amount of delinquent credit balances in the early stages is more than twice the amount of mid- and late-stage delinquencies. At the end of the first quarter of 2012, early-stage delinquencies at Canadian businesses averaged $7,990, while mid-stage delinquencies averaged $2,560 and late-stage delinquencies averaged $3,020. Delinquency rates also are significantly higher in the 30-59 days past due timeframe than in longer terms.
About the Report
Equifax analyzed its database of more than 2.5 million Canadian companies and more than 1.5 million monthly-reported trade lines or payment experiences as a part of its comparative analysis of early, mid and late stage business-to-business payment delinquency. Eighty percent of the businesses included in the analysis have less than 10 employees.
Equifax Commercial Information Solutions
Equifax Commercial Information Solutions is the leading provider of small business intelligence. We provide the information and expertise necessary for companies to best understand and manage their dealings with small business to enterprise customers, prospects and suppliers. Our best-in-class commercial credit risk data, combined with highly predictive scoring, corporate linkage, and innovative technology, enables companies to make quick, confident credit decisions and minimize potential losses. Leveraging our EFX ID® keying and linkage technology, companies can also gain greater B-to-B visibility into their customers and prospects as well as improve the precision of their sales and marketing efforts - from customer acquisition to retention and growth.
Equifax is a global leader in consumer, commercial and workforce information solutions, that provides businesses of all sizes and consumers with insight and information they can trust. Equifax organizes and assimilates data on more than 500 million consumers and 81 million businesses worldwide, and uses advanced analytics and proprietary technology to create and deliver customized insights that enrich both the performance of businesses and the lives of consumers.
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