Jump in UK administrations.
13th February 2020.
James Salmon, Operations Director.
Analysis by KPMG reveals the number of companies falling into administration in England and Wales jumped by almost 5% in 2019.
The study found 1,403 firms went into administration, up from 1,341 in 2018.
It does not include high-profile corporate collapses such as that of Thomas Cook, which went straight into liquidation.
Firms deemed to be in financial distress may go into administration in an attempt to salvage themselves as a going concern or to recoup more money for creditors.
The official annual total compiled by the government’s Insolvency Service is due to be published shortly. Its 2018 data published last April showed the highest level of company administrations in five years.
Building and construction companies were the hardest hit by challenging trading conditions last year and the number of administrations in the sector jumped from 216 to 254.
Real estate companies were also badly affected, with the number of insolvencies jumping to 69, up from 53 in 2018, due to a mix of political uncertainty and the knock on effect of the declining retail sector. The fall and ongoing restructuring of a large number of high street retailers through CVAs, used often to reduce rents, has had a ‘profound’ impact on commercial property income and values.
Despite the tough year for the UK high street, the overall number of retailers entering administration dropped in 2019 from the 170 in 2018 to 133. Karen Millen, Jack Wills and Bonmarche were among the fashion brands to collapse last year.
Insolvencies spiked in the third quarter of the year, jumping to 420, including Late Rooms and Eversmart Energy.
In the final quarter, administrations fell back to 311, with Clintons and Toto Energy among the companies that collapsed between October and December.
Head of restructuring at KPMG, Blair Nimmo commented: “2019 was a year characterised by profound political and economic uncertainty, with consumer confidence remaining fragile and companies continuing to bear the brunt of rising overheads and increased costs.
“While many businesses battened down the financial hatches, adopting a prudent and cautious strategy, for some, the challenging trading conditions proved to be a bridge too far.”
He added: “It’s certainly no surprise that we have seen an increase in real estate insolvencies over the past 12 months, particularly when you consider two specific drivers of activity.
“Firstly, companies that specialise and support residential property development and investment were significantly affected by persistent geo-political and economic uncertainty.
“And of course, the demise and ongoing restructuring of a large number of high street retailers is having a profound impact on commercial property income and values.”
Contractor Clugston went bust owing suppliers £64m
Clugston collapsed owing subcontractors and suppliers £64m.
The massive debts were set out in the administrator’s report on Clugston Group filed at Companies House by KPMG.
The report said unsecured creditors are expected to receive some money for their unpaid bills but “the quantum and timing is unknown.”
Clugston collapsed in December as construction work on 21 sites across the country was stopped.
The report blames the contractor’s demise on problem Energy from Waste contracts and an “acute cash flow issue.”
The report also said: “The position was further exacerbated following the failure of a key subcontractor in June 2019 which resulted in significant ransom positions from the supply chain.”
Did you notice these other Administrations?
Endurance events company Tough Mudder has gone into administration, and has appointed BM Advisory to advise on the sale of its business and assets. The company will continue to trade as normal, with all scheduled UK and Germany events this year set to go ahead.
Only last week, however, KPMG was appointed as administrator to the department store chain Beales, threatening 1,300 jobs in the latest blow to the UK high street.
Elsewhere, PwC’s Toby Underwood and Zelf Hussain have begun the wind down of The Book People, after a buyer could not be found for the retailer.
Finally, in East Yorkshire, J Rotheram Masonry has called in KPMG as administrator, with the loss of more than 200 jobs.
Probe into crash of legendary motorcycle firm
In related news, MPs have called for an investigation into the collapse of motorcycle manufacturer Norton.
The boss of the firm, Stuart Garner, is to face the Pensions Ombudsman today after dozens of complaints were made about pensions being invested into the company just before its demise.
A report by Norton’s administrators BDO for prospective buyers of the business shows Garner personally owes Norton £160,000 and another loan of £324,002 to one of Garner’s other companies has been written off.
Norton also had an £800k fleet of luxury cars. Garner claims he lost everything after Norton’s main lender Metro pulled the plug “without dialogue” a fortnight ago.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
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You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections