Company Insolvencies Continue To Soar
The latest company insolvency statistics have revealed registered company insolvencies are 16% higher year on year and 11% higher than pre-pandemic levels, in England and Wales with 1,679 company insolvencies recorded in September.
The picture in Scotland is even bleaker with company insolvencies spiking 47% compared to September 2021 and 36% higher than pre-pandemic levels with 103 company insolvencies last month.
Creditors’ Voluntary Liquidations (CVLs) seen a modest rise of 4% whilst reaching levels 25% higher than they were in 2019, pre-COVID. A CVL is when an insolvent company is forced into liquidation, often due to creditors issuing a winding up petition as they have failed to pay what they owe, so this particular figure should be a clear warning to collect any overdue amounts you currently have outstanding from your customers.
Is the worst yet to come?
Soaring costs are placing thousands of businesses under heavy fire and the recent poor performance of the pound is forcing cost of imports up, further fuelling inflation.
Continuous growth in company insolvencies like we are seeing cannot be sustained. The credit cycle is so delicate that the impact of company insolvencies can be catastrophic and send a ripple effect of late or non-payments.
Act now to protect your business’ cashflow
We are seeing company insolvencies continue to rise month on month and with the current economic outlook things do not look like changing anytime soon.
Even if you do not think your business is at risk of collapse, your customers might be. If they go bust whilst owing you for outstanding invoices, then your chances of receiving what you’re owed are extremely slim.
It is critical that businesses act immediately to ensure they are protected from the risk of late or non-payment and the negative impact this will have on cashflow at a time where it is more important than ever.
Implement a sound credit control process
Given the current culture of late payments we are witnessing in the UK, businesses with any chance of being regularly paid on time must follow a watertight credit control process.
The good news is effective credit management doesn’t need to be complicated. In fact, it can be broken down into 3 steps:
Know your customer.
It is your responsibility to understand your client’s financial situation and the best way to do this is by running a company credit check. Remember to always monitor the reports you’ve pulled on your customers for any changes, so you are always making credit decisions using the most accurate up to date data.
Proactively chase invoices when they become overdue.
One of the biggest mistakes we see businesses make with their credit control is not chasing invoices regularly. As soon as your invoices become overdue you should have payment chasers prepared to send until payment is made. Don’t worry we wrote a complete guide to chasing late payment that explains what you should include in each payment chaser!
Have a plan in place to recover commercial debt.
From time to time, you will find debtors take advantage and try every trick in the book to avoid paying you. In these instances, it is worth getting the professionals involved to recover what you are owed.
Here at Darcey Quigley & Co we have been collecting commercial debts from around the world for over 15 years. Our track record speaks for itself with a 5 star rating on Trustpilot.
Whether you have commercial debts in the UK or you have a customer overseas who is not paying you, we are here to help. Find out more about our UK commercial debt recovery services and our approach to international commercial debt recovery.
Have outstanding invoices? You can claim Late Payment Interest & Compensation
The Late Payment of Commercial Debts Act was introduced to give businesses a statutory right to claim interest from other businesses for late commercial payment.
It has since evolved to also include compensation and debt recovery costs!
Find out exactly how much you are eligible to claim with our free calculator.
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.
Connect with me on LinkedIn!