2020 ROUND UP
“The less said about 2020 the better.”
This is the sentiment amongst many, and who can blame them? In a year unlike any other that we have faced in our lifetimes we have had to adapt and improvise to keep things ticking, make huge sacrifices and be much more resourceful.
Let’s take a look at the past year, the impact it has had on business and the UK economy and what the economic outlook is like going into 2021.
2020 as we seen it
Working in commercial debt recovery we see the not-so-pretty side of business on a regular basis but no one could have expected the year we’ve had.
When the first lockdown was announced at the end of March there was a lot of uncertainty.
How long will this last?
Do we have enough cash in reserve to see us through the next month?
Can we afford a late payment on this invoice?
What about my cash flow?
These were just some of the many questions going through the minds of business owners and credit controllers. In the midst of those foggy first couple of months we saw many businesses panicking and completely put a halt on paying any outstanding invoices to try and help their cash flow.
As businesses that usually paid invoices on time were now putting a stop to any outgoing payments we found that they felt guilty if they were to ask for payments themselves. This total freeze meant businesses were invoicing less.
With businesses not paying outstanding invoices and extremely low business and consumer confidence UK GDP was estimated to have contracted by almost 20% between April and June, after shrinking more than 10% in the three months previous. The position looked bleak.
As we moved through a hopeful spring and into a summer that saw relaxed lockdown restrictions, the “eat out to help out” scheme was put in place to help kick start consumer spending in the hospitality industry. UK GDP grew 15.5% between June and September, the fastest three-month growth on record! Many businesses had already adapted to working from home by this point and had established systems and processes that helped them operate as best they could, another very large contributing factor to getting UK business’ wheels turning again.
We’ve all had to become more flexible in the ways we work and oftentimes find ways to work smarter, particularly working remotely. Businesses have also had to be more flexible, not only with staff but also in the ways they operate. We have noticed more businesses settling for late invoices being paid in instalments to give them the best chance of recouping monies owed.
The UK has had to get to grips with new restrictions and areas coming in and out of tiers through the winter months with COVID-19 cases rising, and this has had a direct impact on productivity with UK GDP is expected to contract once again before the end of year and to fall by 11.2% for the year.
Light at the end of the tunnel
However, it is not all doom and gloom and some industries have fared better than others as house building continues with more and more new homes popping up and business has also picked up for lawyers and accountants through Autumn and Winter. We have also seen the construction industry fair well, particularly related wholesalers.
With business now moving in the right direction, albeit a little slow, things are looking up and we are very optimistic for the year ahead, especially with the recent vaccination roll-out. It won’t be an easy stroll but business will pick up.
Recovering debt during the pandemic
Businesses we speak to are still apprehensive even as we approach the new year nine months on from when we first entered lockdown. Keeping a positive cash flow is the number one priority for many. We are still experiencing a large volume of calls from businesses across all industries day by day seeking to absorb every piece of advice they can get.
Our advice is that if you have any outstanding invoices is to get on top of it immediately. If a debtor goes into insolvency you do not want to be at the back of the queue waiting to get paid, as that cash may never reach you.
Our standard timeframe for recovery before March 23rd was 48 hours with 93% of cases recovered. LPI (late payment and interest) i.e. the amount of the outstanding debt that businesses could expect to recover was 94%. Like most industries this year debt recovery has been impacted, however we have not fared too badly. As things stand we are still recovering 93% of cases brought to us however the timescale is 5 days on average and LPI currently sits at around 72%.
Here are six articles that we wrote last year on that will be extremely relevant through the beginning of 2021:
How to Handle Poor Payment Behaviour From Businesses
Tips to Help Your Business Recover From the Coronavirus Pandemic
Should Your Business Consider Additional Funding?
Why business relationships are so important
Let us help
It has been evident this year that there are enough risks for businesses in the current climate without taking unnecessary chances.
COVID-19 has been detrimental to many businesses all over the UK with certain industries more adversely affected than others. However there is no disputing the fact that every business has had to adjust their credit management facilities due to the disruption the pandemic has caused. Darcey Quigley has been there as and when our clients have requested, acting as an extension of their existing credit management and debt recovery processes. Retaining our 93% recovery success rate during this difficult year speaks volumes of our services.
If you are worried about any outstanding invoices no matter how big or small, call us for a free consultation with one of our commercial debt recovery experts. We’ll be able to give you advice based on your current situation, credit check your potential customers, help manage your sales ledger and chase any outstanding debts you have.
Meet our credit management and commercial debt recovery content writer, Declan!
With a keen eye for detail and a passion for educating others, Declan is committed to creating informative and engaging content that empowers readers to get a firner grasp of their credit control to improve their cashflow.
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