Personal Insolvency Rise Could Cause Trouble For Firms

26th January 2018.

Recent official figures have revealed that an increased number of personal finances are deteriorating to the point of insolvency. According to the research, consumer credit rates have got higher while wages have got lower, with people forced to borrow more to keep to the same standard of living. This of course results in further issues when consumers can’t pay their debts. Many businesses could start to see an impact as consumer insolvencies begin to affect sales figures and consumer behaviour. Businesses should take special precautions to ensure their business does not follow suit with their consumers.

Audit, tax and consulting firm RSM expects around 24,500 people will enter insolvency in the fourth quarter of 2017.

Figures already released by the Insolvency Service for the first three-quarters of 2017 showed just over 74,000 people were declared insolvent across England and Wales.

RSM’s predictions mean the total for 2017 could edge up to around 98,500 – which would be the highest annual figure seen in three years.

Alec Pillmoor, a personal insolvency partner at RSM, said that with relatively low unemployment levels you would not necessarily expect to see an uplift in personal insolvencies, but people are buckling under the pressure of problem debt.”

As more people buckle under financial strain, this will have an knock-on effect with businesses. As Brexit concerns and increased borrowing rates begin to have an effect on consumer behaviour,. businesses may start to suffer. Here at the Credit Protection Association we encourage our business members not to fall into a false sense of security as figures for corporate insolvencies could shift. We encourage business owners to maintain regular communication with consumers and customers to ensure personal financial situations do not affect an ability to pay. If your business does start to suffer, please come to CPA for help and advice and will can ensure you’re miles away from that insolvency brink!