Company Insolvencies Show No Sign of Slowing Down
The swathe of corporate insolvencies we’ve seen over the past year shows no sign of slowing down!
February 2023 figures show the number of companies going insolvent jumped 17% year on year, reaching 1,783.
This is a huge 33% higher than pre-pandemic levels!
In Scotland company insolvencies are up 11% compared to last year.
The frightening thing is companies struggling to pay their outstanding invoices are at serious risk of going out of business. Creditors’ Voluntary Liquidations (CVLs) are 13% higher than in February 2022 and a massive 59% higher than February 2020!
What does-it mean for businesses?
The tsunami of corporate insolvencies we’re seeing right now should be sounding alarm bells, especially if you have outstanding invoices yet to be paid!
You see, even if you don’t think your own company is at risk of insolvency, there’s a high likelihood that at least one of your customers could be.
With CVLs now 59% higher than what they were before the pandemic businesses are trading in an very perilous environment.
The credit cycle can be extremely delicate with one break in the chain causing a huge ripple effect across entire industries.
Put it this way, if a customer with a large order fails to pay you, would you be able to afford to pay all of your own outstanding invoices?
This is why it’s critical that business remain vigilant today but following an effective credit control process.
Steps you can take to protect your business
Credit control is a fundamental part of doing business.
However, it’s often overlooked.
It could be because it’s not really the exciting side of doing business. You just assume that you’ll be paid for the work you’ve carried out or product you’ve delivered.
The fact is most businesses we see who find themselves with an issue with unpaid invoices only realise the importance of credit control when it’s too late.
Get to know your customers
The first thing you should do is run a business credit report when you accept an order, for both new and existing clients.
Credit scores and limits continually change so you should always make credit decisions based on the most up to date credit data.
A business credit report will let you know how trustworthy a business with when it comes to paying on time by giving you a credit rating, credit limit and their track record of paying on time.
For more tips read our complete guide to reading a business credit report!
Be proactive chasing payment
When your invoices aren’t paid on time you must be proactive chasing!
Failing to put some pressure on late payers can let them off the hook and you lose out on what you’re owed.
We’re not suggesting you go in heavy-handed immediately but you’ll need to have a series of payment reminders and chasers ready to send when payment isn’t made.
Find out how to write an email and letter for outstanding payment!
Have a back up plan for a gap in your cashflow
Waiting for payment to be made can bring a lot of pressure, particularly when you have your own outgoings to pay!
Having a plan to plug the hole in your cashflow whilst waiting for payment to be made may be essential for survival or help you invest in growing your business.
There are some good options available to businesses now, allowing some flexibility on choosing an option that suits you:
Commercial Debt Recovery
Outsourcing to a commercial debt recovery specialist may be the only hope you have of recovering a problematic debt.
Collect-it is part of the Know-it platform and allows you to action a debt recovery case in-platform where you’ll receive live case updates on the progression of your case.
We’ve partnered with UK leading commercial debt recovery specialists Darcey Quigley & Co who will handle your case.
Single Invoice Trade Credit insurance
Single invoice trade credit insurance protects your businesses against the risk of your customers going into liquidation or administration.
If your customers with outstanding invoices go into liquidation your policy will ensure you are still paid!
Use Credit Insure-it to get an instant quote for insuring your invoices!
With invoice finance you can secure funding using your unpaid invoices as collateral.
Invoice Finance-it you only repay your loan once your outstanding invoice has been paid, meaning there’s no costly monthly repayments.
How Know-it can help
Know-it is the automated credit control solution that makes credit management simple.
Save time, maintain a healthy cashflow and protect yourself against the threat of non-payment and insolvencies.
When you use a business credit report using Check-it, we automatically monitor for any changes for 12 months!
This means you’re always kept in the “know” about any changes to your customer credit reports.
Check-it shows you all the notices from The Gazette regarding your customers making it easy for you to identify a potential financial issue before it arises, and provide you with even more data to make more informed credit decisions.
Unsecured Creditor Claims
This data is priceless!
We can identify which of your customers have suffered losses as a result of their own clients going into liquidation or administration.
When a business goes into liquidation or administration there’s an extremely high chance that they won’t be paying any of their outstanding invoices, meaning if you’re owed money you’ll lose out!
Therefore, you can see the money you customers have missed out on, allowing you to avoid a potential cashflow disaster of your own, as this data isn’t provided in other business credit reports.
Access everything you need for credit control in one simple platform
No need for outsourced credit control. Automate the complete process!
Gone are the days of needing multiple expensive tools and products for credit control.
Know-it is one tool that covers everything you need.
Sign up to Know-it for free and get your 1st business credit report FREE!
Declan is our content writer here at Know-it!
He is committed to educating readers on the importance of credit control and how technology can help streamline processes for SMEs whilst providing actionable help on how businesses can mitigate credit risk, reduce debtor days and boost their cashflow.
Connect with me on LinkedIn!