Rough times ahead for UK businesses: Control the controllables

The ongoing surge in corporate insolvencies is a significant cause for concern among UK businesses, and this trend is expected to persist into 2024, echoing the relentless pace witnessed in 2023

Rough times ahead for UK businesses

2023 statistics reveal a staggering 17% year-on-year increase from 2022 to 2023 and maybe even more concerning marking a substantial 33% spike compared to the pre-pandemic era.

In the final statistics release of last year, the Insolvency Service confirmed 2,466 registered company insolvencies in November 2023, a number 21% higher than the previous November and 7% higher than the figures in October 2023.

A recent report from accounting giant PwC predicts a ‘significant’ rise in business’ collapsing in 2024, with the hotels and catering, manufacturing, and transport and storage sectors likely to be the hardest hit.

The implications of insolvencies are profound. The current wave of corporate insolvencies serves as a resounding warning, particularly for those with unpaid invoices awaiting resolution. Even if a company believes it stands resilient against insolvency, the stark reality is that its customers may not be as fortunate.

In this volatile environment, the pronounced 59% increase in Creditors’ Voluntary Liquidations (CVLs) compared to pre-pandemic levels suggests that businesses are operating in a tough and unpredictable landscape. The delicate nature of the credit cycle is underscored, emphasising how a disruption in this chain can send shockwaves across entire industries.

Consider this scenario: if a customer with a substantial order fails to fulfil their payment obligations, would your business have the financial capacity to settle all outstanding invoices promptly? This underscores the critical importance of businesses remaining vigilant and implementing effective credit control processes. In such uncertain times, proactively managing outstanding invoices can be the key to navigating the precarious economic landscape and ensuring the stability of your enterprise.

It’s time to consider what you CAN control, and often that starts with your own credit control. Consider the following:

  • Be on top of your payment cycles.
  • Understand your customers – credit checks and monitoring are key.
  • Regularly review credit limits for your clients. Are they too high or sometimes even too low?
  • New sales & clients are good, but how much have you sat unrealised on your ledger?
  • Be proactive in chasing payments – when your invoices aren’t paid on time, you must be proactive.
  • Have a backup plan for a gap in your cash flow – what finance options could help bridge short-term gaps?
  • If all else fails, consider when you need to look at Commercial Debt Recovery. And remember, the older the debt, the harder and more expensive it is to recover.

As 2024 begins, it’s time for UK businesses to prepare for the next 12 months and become more proactive in shoring up their own ledgers to ensure they can continue to grow when others around them may be struggling.

Phil Hobden
Phil Hobden

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