Economic Outlook and Its Impact on Credit and Collections (Video)

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The economy continues to send mixed signals -- persistent inflation, ongoing discussions around recession amid a continued strong jobs market, wage growth, and robust consumer spending. As these conditions persevere, those in the trade credit ecosystem remain challenged to forecast how to gauge whether businesses can and will be able to pay, and to pay on time. These were among the issues Marisa DiNatale and Shelby Bates of Moody’s Analytics addressed in the "Economic Outlook and Its Impact on Credit and Collections" breakout session at MFM’s 2023 Annual Conference in May.

While DiNatale downplayed the possibility of a recession in 2023, she puts the possibility of a 2024 recession at 55-60%. She believes the job market will eventually cool, putting less money in consumers’ pockets and thus less overall spending. "We’ve experienced a lot in the past three years: the COVID pandemic and recession upended labor markets and changed the way we all worked," she said. "Many people have never experienced 9% inflation. But that’s one facet of the economy. There are other parts of the economy that are doing just great."

When it comes to the ability of customers to continue to pay their bills, Bates laid out a slightly more unsure scenario. "The banking crisis and the associated after effects, credit tightening, [questions around whether] small businesses are going to be able to get loans, and will they have high borrowing costs related to those [loans] all play into their fiscal stability," she explained. With 80% of all U.S. enterprises considered small businesses, these are clearly the issues keeping business owners up at night. Bates discussed strategies businesses should put in place to position themselves to remain resilient, from "taking a 360-degree view of your customers" to focusing on metrics, data, and automation.

Mary McKenna, Global Head Customer Finance Operations at NBCUniversal, discusses key indicators relating to the economic environment and much more with Marissa DiNatale and Shelby Bates in the special edition of Office Hours at top.

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