IWFM senior researcher Stuart Rutherford in action during a recent IWFM Navigating Turbulent Times webinar
Late payments in the facilities management sector is “the biggest rising concern in the market right now”, listeners were told in a recent IWFM Navigating Turbulent Times webinar.
Stuart Rutherford, senior research manager at IWFM, shared the results from the most recent IWFM Market Outlook Survey, noting that in 2023, 62% of respondents cited late payments as having a negative impact on the market, up from 32% in 2022. “And that's a big red flag.”
To understand where this increase has come from, it’s useful to understand the context of the market. While there are positives, there are also many negatives.
Promisingly, Rutherford, a researcher with more than 20 years of experience operating in multiple industries, said that while “there's a lot that you're [the FM sector] is dealing with here compared with elsewhere I've seen, it’s encouraging the negative forces aren’t completely overbearing”.
He said: “You’ll see a cocktail of emerging economic factors – rises in energy prices, the worsening state of the UK economy, changes in interest rates that are each compounding the other.”
Concerns over the state of the UK economy have increased by 16 percentage points in 2023 compared with last year.
A correlation to investigate
“It is also clearly seen in our survey that obviously those two things are linked,” Rutherford explained. “So the concern around late payment is linked to concerns about the economy.”
Those most concerned with late payment, unsurprisingly, were SMEs (87%) – “so nearly nine in 10 SMEs are concerned about this issue”, Rutherford points out – whereas 59% of the largest companies cited it as having an negative impact on operations.
Webinar host and IWFM director of communications and insight Jenny Thomas summarised it succinctly: “The whole economic slowdown and downturn really crystallises in the late payments.”
Thomas asked Rutherford a listener’s question seeking clarification on the relationship between respondents being worried about both late payments and economic stability. Specifically, to what extent is one a symptom of the other?
While IWFM hadn’t “run the numbers” yet, Rutherford said: “Our assumption is that there is a close correlation between those two things.” Equally though, correlations between concerns with late payments and interest rates and energy costs are interesting to examine. “Because all of those things are going to be tied together in the same drivers. It speaks to a big issue for everyone right now.”
