Laybuy’s underlying sales and active customers number are falling, as belt tightening measures aimed at stemming the buy now pay later company’s losses also cut into growth. In July the company announced that following a strategic review, it would cut headcount by one-third and take measures to reduce fraud and impairments by improving the quality of its customers and merchants. The cost-cutting has taken its toll. The company’s September half-year financial report shows that customer numbers fell 7 per cent from 931,000 in the March half to 866,000 in the latest half. Underlying sales (gross merchandise value) fell 13.4 per cent from NZ$477 million in the March half to NZ$413 million in the latest half. One of the few positives for the company during the half was a 5.1 per cent half-on-half increase in merchant numbers of 14,400. Income for the half was NZ$25.9 million – up from NZ$21.2 million in. the previous corresponding period. There were reductions in some expense items, such as marketing spend, but overall expenses went up 3.2 per cent to NZ$40 million. Employment expenses almost doubled, which reflects the fact that the headcount reductions are just getting underway. The loss for the half was NZ$14.9 million, compared with a loss of NZ$22.6 million in the previous corresponding period. The customer receivables impairment expense fell 17.5 per cent year-on-year to NZ$8.3 million. The company put this down to the implementation of a fraud prevention strategy but this is misleading. Consumer receivables written off rose 17.8 per cent to NZ$12.6 million but the company cut its allowance for expected credit loss and its allowance for expected loss on undrawn balances to reach the impairment expense figure of NZ$8.3 million. Management was also patting itself on the back for getting late fee income down from 43 per cent of total income in the September half last year to 34 per cent in the latest half. But there is nothing commendable about a credit provider generating a third of its income from penalties. Net cash used in operating activities was NZ$8.2 million, which is only a little less than the company’s cash balance of NZ$8.7 million at September 30. Laybuy’s belt tightening extends to its funding arrangements. Its NZ$30 million facility with Kiwibank was extended for a year and will now expire in June 2024 but its £30 million UK facility with Partners for Growth will be cut to £20 million.