Euler Hermes, the world's largest provider of trade credit insurance, mines its database of receivables each quarter to project performance of the broader economy. “Our clients are telling us who is paying slowly, for how much, and how far they are behind,” says Dan North, chief economist at Euler Hermes. “Past-due receivables indicate that a company doesn't have enough cash to pay all its bills that are due today. Revenue may not match expectations, or the company may not be able to get financing because its creditors are seeing some degree of financial stress. So we look at trends in past-dues as a sign of financial stress by industry and across the economy overall.”

The Euler Hermes Receivables at Risk Index tracks closely with gross domestic product (GDP). “The correlation between the two is 0.7, which is fairly high for an economic time series,” North says. “It turns out the Receivables at Risk Index is a pretty good indicator of what the final GDP is going to show.”

For the fourth quarter of 2014, the index suggests annualized GDP growth will be significantly lower than the third quarter's 5.0 percent but might be higher than the advance estimate from the Bureau of Economic Analysis, released last month, which pegged Q4/2014 GDP at 2.6 percent. The index suggests receivables deteriorated in Q4/2014 in terms of both the frequency with which accounts were past due and the severity, the proportion of the receivable that was past due.

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