The insolvency profession has sounded warnings for quite some time about a predicted ‘debt tsunami’ resulting from the COVID-19 pandemic. Now it looks like it’s finally arrived. But what can businesses do to get ahead of the wave?
Cash flow shows no signs of improvement and inflation will continue to surge in coming months – compounded by the recent cost of living crisis, high inflation, supply chain issues and soaring energy prices.
Cumbrian businesses are already feeling the impact. Experts at leading law firm Muckle LLP advise it is crucial for those with debt owed to seek advice at the earliest opportunity to get customer invoices paid quicker.
According to recent figures released by the FSB, one in ten (8%) say late payment is now threatening the viability of their business and that close to one in three (30%) has seen late payment of invoices increase over the last three months.
It also looks like the cash-flow squeeze is starting to translate into formal insolvency procedures. Figures show that, in February 2022, the total number of company insolvencies rose by 121% compared to February 2021 and was 13% higher than the number registered pre-pandemic, in February 2020. This increase has been driven by Creditors’ Voluntary Liquidations, which were 40% higher than pre-pandemic levels.*
Julie Parr, Director of Business Improvement at Muckle LLP, said: “We understand the damaging impact this is having on businesses in the region. Our clients tell us that chasing customer payments is a significant distraction from their businesses’ day-to-day running.
“But now isn’t the time to be complacent. Your customers will likely have multiple creditors. Businesses that are proactive with their debt collection will see their invoices paid first.
“If you’ve already asked for payment but not received it, then warned you’ll escalate and still not been paid, then you need to seek help. Using a professional service to collect payment will save your time, money and resources.
“Our market-leading debt recovery team has an enviable track record, recovering 92% of B2B debts. We help you get paid quicker, reduce debt write-off, and in some cases, reclaim more than the debt is worth. While results are important, we understand it’s a delicate topic and we ensure that we act appropriately and ethically at what is a difficult time for many organisations. We advise any business to seek professional help as early as possible to make the process seamless for all parties involved.”
Debt collection is becoming ever more sophisticated with technology speeding up the process, using insights to find the best way to recover monies owed.
Muckle is leading the way in debt recovery with its easy-to-use online tool – Muckle Collect. This online portal allows businesses 24/7 access to submit and manage outstanding debts. Making it easier than ever to log each invoice, agree on a strategy for recovery and track progress – either for a fixed cost or on a ‘no recovery, no fee basis’.