Renewed Focus on Cash Flow Could Protect Retailers

4th May 2o18.

The number of retailers in significant financial distress has increased by a fifth over the past year, with almost 50,000 companies struggling to stay afloat, according to Begbies Traynor, the insolvency consultancy.

While online competition continues to threaten traditional retail concepts, consumer confidence has also taken a hit, as consumers show increasing reluctance to part with their hard-earnt cash. New Look and Maplin announced last month a major restructuring within their business, which would result in the closure of multiple branches across the country, while Toys R Us announced the closure of all its UK stores. Falling profits and tough competition have been the major cause, and with the business landscape continuing to be tough to inhabit, further casualties are predicted.

The new data from Begbies Traynor has warned that the high cost of trading on the high street is pushing retailers to the “point of no return”. While the easiest way to match online competitors is through new technology and modern tactics, many businesses cannot afford it and therefore risk lagging behind. At the Credit Protection Association, our debt recovery services free up the cash flow that our members can utilise to invest in new technology and opportunities.

An analysis found that 42,958 retailers ended the first quarter of the year in significant financial distress, up 21 percent on the year before. General retailers were the worst hit, with 30,668 ending the first three months in difficulty, up 25 percent over the year.

Toys R Us and Maplin, the electronics group, have already collapsed and others including New Look have undergone company voluntary arrangements, a form of the insolvency process.

It has been a difficult few months for retailers, with consumers not giving up their money easily. Last year’s Christmas, and even the discount bonanza, Black Friday, were both disappointing holidays for retailers. Sales have stumbled and profits have taken a hit, with retailers trying hard to encourage consumer interest in the non-essentials. Clothing retailers, in particular, have struggled to encourage consumer purchases, along with big-ticket items such as furniture and homeware.

While it is tough trading on the high street at present, all roads do not have to lead to the insolvency practitioner. Consumers of the modern age are more likely to engage with retailers who reflect the times, and stores should incorporate interactive engagement such as automation assistants or just attractive websites. For those retailers who are hesitant to embrace the digital age due to expense, approaching third-party credit managers could free up the necessary cash flow needed to pursue new opportunities.

At the Credit Protection Association, our debt recovery services chase down unpaid invoices and recover owed funds that our members can put back into their buisness. Our members have used this extra cash to invest in new technology, equipment or merely to hire an e-commerce team to improve the online presence of the brand. At the same time, our credit checks and credit reports are utilised by our members to investigate all suppliers and customers. It is important to scrutinise everyone within your business, to ensure their financial history will show no bad payment behaviour or maltreatment of suppliers.

It can be considered a lesser risk for a business to shut up shop rather than continue trade in difficult conditions. This does not have to be the case, and our services at CPA can prove it.

Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.

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!

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