When Will Company Insolvencies Begin To Fall?
Company insolvency figures for October have been released and they are quite frankly, frightening.
The number of company insolvencies in England and Wales last month were 38% higher than October 2021 and 32% higher than pre-pandemic levels, with 1,948 companies filing for insolvency.
The 242 compulsory liquidations reported in October this year were a staggering 400% more than last year.
In Scotland the story is almost identical with 82 company insolvencies meaning they were 22% higher year on year.
Comparing October 2022 figures to September 2022 shows company insolvencies are continuing to rise, increasing 16% month on month.
So will company insolvencies begin to fall?
All the evidence indicates no, in fact they will only get worse through the winter into 2023.
The Bank of England recently warned that they expect the UK to fall into its longest ever recession.
With inflation recently reaching the highest rate on record and interest rates soaring we are all looking at having less disposable cash to play with which has a hugely detrimental impact on businesses and the economy.
As consumers and businesses alike all spend less there is a grave risk to many businesses whether they will be able to survive, especially against the back drop of energy prices, logistical challenges and a weak pound.
What can you do as a business to mitigate the risk of insolvencies
The best advice we can give is to remain vigilant and ensure you are being paid for the work you are doing and all your invoices are paid promptly.
As more businesses find it difficult to stay solvent, we expect instances of late or non-payment to rise sharply!
As businesses fold they will not be able to pay any invoices they have outstanding, meaning their creditors will miss out on much needed cash during a recession. The effects can be catastrophic as a ripple effect of defaults spreads across sectors.
Getting a firm grasp of your credit control is critical. You should be pro-actively chasing payments as they become overdue. Keeping a constant stream of communication with your customers is key and showing some empathy goes a long way.
However, never leave yourself short. During times like these your number one priority is getting paid for work you’ve carried out or goods you have delivered.
You should also be thinking how well you know your customers.
What is their credit rating like? Are you accepting orders within their credit limit? Is there anything on their credit report that you should be aware of such as CCJs or defaults?
Invoice insurance
Invoice insurance protects you in the event your customers go into liquidation or administration.
Platforms such as Nimbla allow you to insure single invoices in the event the invoice isn’t paid as a result of a liquidation or administration.
Invoice insurance has become very cost effective recently as previously you would need to insure a full ledger, and not just individual invoices.
Ensure you are paid on time
Here at Darcey Quigley & Co we offer a complete outsourced credit control solution for your business.
If you do not have a credit control function or lack the resources internally to keep a watchful eye over your sales ledger and be proactive chasing payments, then this is the perfect solution for you during these tough times.
If you already have internal credit control we seamlessly integrate with your existing team and processes where you can think of us as an extension of your current team, freeing up resources in your business so you can focus on other areas.
Outsourcing your credit control and debt collection to Darcey Quigley allows you to take back control. Darcey Quigley will provide a personalised business to business credit control programme for you including: customer invoicing, telephone, email and post reminders, scheduling statements and chasing all outstanding payments and invoices.
Find out more by scheduling a call with one of our specialists.
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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