The credit and collection risk manager cannot be satisfied with the data at his disposal. To increase efficiency and effectiveness, he must collect external data on projected products of the credit and collection systems in priority for the industry in which he operates. It is customary to organize and hold meetings between officials in the field of credit and collection, even from competing companies. These meetings are essential for the credit risk and collection manager to position himself in comparison to his colleagues and find out in which areas he needs to improve.
There is a lot of information out there available to the collection manager. It is important to build your own portfolio of market information and follow up the different KPIs over time.
Here are a few examples:
Average DSO per industry in the USA
The average DSO per industry in the USA can vary significantly, so it’s helpful to know which specific industries you’re interested in. However, I can provide some general information and resources to get you started:
Overall Average DSO in the USA:
- The average DSO for all companies in the USA varies depending on the data source and year considered. However, it generally falls within the range of 30-45 days.
- The 2022 Working Capital Scorecard by CFO/The Hackett Group reported an average DSO of 40.6 days for the largest 1,000 US companies.
Average DSO per Industry:
Here are some examples of average DSOs for various industries:
- High DSO (60+ days): Management consulting, oil and gas extraction, technical schools, automotive equipment rental, outpatient care centers, mining support, architectural and engineering services.
- Moderate DSO (30-60 days): Healthcare, manufacturing, consumer goods, construction, transportation.
- Low DSO (less than 30 days): Technology, food and beverage, general and specialty retail.
Resources for Finding Industry-Specific DSO Data:
- SageWorks: Provides detailed financial data on many private companies, including DSO by industry.
- Robert Morris Associates: Offers financial benchmarks and ratios for different industries, including DSO.
- Credit Research Foundation: Publishes industry-specific credit reports that often include DSO data.
- Industry Associations: Many industry associations publish financial reports and benchmarks that include data on DSO.
Important Note:
- DSO can vary significantly within an industry depending on company size, business model, customer payment terms, and other factors. Therefore, it’s crucial to compare your company’s DSO to other companies in your specific industry and segment.
Average DSO per industry in the UK
Similar to the US, DSO in the UK varies depending on the industry. Here’s some information to help you:
Overall Average DSO in the UK:
- Like the US, the average DSO for all companies in the UK varies with data source and year. It generally falls within the range of 40-50 days.
- PwC’s “Working Capital: opportunities knock” report (2019) indicates an average DSO of 56 days for UK companies.
Average DSO per Industry:
Here are some examples of average DSOs for various industries in the UK:
- High DSO (60+ days): Construction, Engineering, Professional Services, Travel & Leisure, Food & Beverage (manufacturing).
- Moderate DSO (40-60 days): Healthcare, Wholesale & Distribution, Manufacturing, Technology, Retail.
- Low DSO (less than 40 days): Utilities, Public Administration, Telecommunications, Chemicals.
Resources for Finding Industry-Specific DSO Data in the UK:
- Experian: Provides financial data and reports, including industry-specific benchmarks and DSO.
- The Credit Research Foundation (CRF): Offers reports like the “National Summary of Domestic Trade Receivables (NSDTR)” with ageing A/R percentages by industry segment.
- Industry Associations: Many UK industry associations publish financial reports and benchmarks that include DSO data relevant to their members.
- Dun & Bradstreet: Offers “Aging Accounts Receivable and DSO Industry Report” with details on DSO and accounts receivable ageing for various UK industries.
Important Note:
- Similar to the US, DSO can vary significantly within an industry in the UK. Be sure to compare your company’s DSO to others in your specific industry and segment for accurate benchmarking.
Consumer Bad Debt Percentage per Industry in the UK
Finding precise consumer bad debt percentages per industry in the UK can be tricky. While data on overall bad debt exists, industry breakdowns are less common. However, I can offer some insights and resources to help you:
Overall Consumer Bad Debt Levels in the UK:
- The Bank of England reports monthly household debt data, including total outstanding debt and the credit card delinquency rate (a measure of bad debt for this specific loan type). As of September 2023, the delinquency rate sits at 5.4%.
- Experian’s Q2 2023 Consumer Credit Default Index reveals a 0.24% increase in defaults compared to Q1 2023, indicating a gradual rise in bad debt levels.
Industry-Specific Insights:
- As in the US, some industries in the UK face higher consumer bad debt risks due to their products or services:
- Financial Services: Similar to the US, lenders like credit card companies and non-bank lenders encounter higher risks due to unsecured loans and larger loan-to-value ratios.
- Utilities: Rising energy costs could lead to increased bad debt for energy providers as consumers struggle to pay bills.
- Telecommunications: Mobile phone operators may face bad debt challenges due to high contract cancellation rates and potential affordability issues.
Resources:
- Industry Research Reports: Look for reports from firms like Experian, Equifax, or industry-specific research groups that might include data on credit risk and bad debt by sector in the UK.
- The Financial Conduct Authority (FCA): The FCA publishes data and reports on consumer credit trends and regulations, offering insights into potential industry risk areas.
- Trade Associations: Similar to the US, UK industry trade associations may possess information or data on bad debt within their specific sectors.
Note:
- Industry bad debt percentages in the UK depend on various factors like economic conditions, consumer demographics, and business practices. The information provided here is a general overview and shouldn’t be used for precise comparisons or financial decisions.
Remember, finding exact bad debt percentages by industry in the UK may require further research and potentially paid industry reports. However, the resources and insights provided should give you a better understanding of the landscape and potential high-risk sectors.
Percentage of rejected credit card payments in the US
The percentage of rejected credit card payments in the US can vary depending on several factors, including:
- Card network: Different networks (Visa, Mastercard, etc.) have slightly different approval and decline rates.
- Type of transaction: Online transactions, card-not-present transactions, and international transactions tend to have higher decline rates than in-person transactions.
- Merchant category: Certain industries, like travel and leisure, gambling, and online retail, typically have higher decline rates due to a higher risk of fraud.
- Cardholder factors: The cardholder’s credit score, recent spending history, and location can also influence whether a transaction is approved or declined.
However, here are some general estimates:
- Overall decline rate: The average decline rate for all credit card transactions in the US is estimated to be between 15% and 20%.
- Recurring payments: For recurring payments, like subscriptions or memberships, the decline rate can be as high as 30%.
- Specific industries: The decline rate for travel and leisure transactions can be as high as 40%, while the rate for online retail transactions can be around 25%.
It’s important to note that these are just estimates, and the actual decline rate for any given transaction can be much higher or lower.
Here are some additional resources that you may find helpful:
- Federal Reserve Bank of New York: https://www.newyorkfed.org/newsevents/news/research/2023/20231120
- Chargebee: https://support.chargebee.com/support/solutions/articles/219969-i-m-getting-card-declined-or-processor-declined-error-what-s-going-on-
- Money: https://www.usatoday.com/story/money/personalfinance/2023/07/17/loan-rejection-rate-jumps-fed/70422586007/
Percentage of rejected consumers direct debit payments in the UK
Similar to the US with credit card payments, the percentage of rejected consumer direct debit payments in the UK varies and depends on several factors:
Factors impacting Direct Debit rejection rates:
- Reason for payment: Recurring payments often have higher rejection rates than one-time payments.
- Consumer bank account: Insufficient funds, account closed, or technical issues with the bank can lead to declines.
- Merchant: Some merchants, particularly those in high-risk industries like gambling or adult services, experience higher decline rates due to fraud concerns.
- Direct Debit Guarantee Scheme: Consumers have the right to cancel or amend direct debits, which can contribute to some rejections.
General rejection rate estimates:
- Overall range: The average rejection rate for consumer direct debits in the UK is estimated to be between 1% and 5%.
- Specific sectors: High-risk industries can see rates upwards of 10%, while low-risk sectors like utilities might have rates below 1%.
Resources for further information:
- GoCardless: https://gocardless.com/ – A direct debit payment provider, offers resources and insights on the direct debit landscape, including statistics on decline rates.
- UK Finance: https://www.ukfinance.org.uk/ – Trade association for the UK financial services industry, publishes reports and data on various payment methods, including direct debits.
Important note: These are just estimated ranges, and the actual rejection rate for any given direct debit can be higher or lower depending on the specific circumstances.