Small business insolvencies on the rise.
14/05/2019.
Small businesses are increasingly struggling to survive amid challenges caused by difficult market conditions and late payments. New statistics from the Insolvency Service reveal that 4,187 small and medium-sized enterprises became insolvent between January and March this year, marking a 6% increase from the final quarter of 2018. As Brexit uncertainty and rising costs in many sectors continue to disturb growth, the problem looks set to worsen – with data from the government agency also indicating that a growing number of small businesses in Britain are falling into significant financial distress.
Construction sector firms worst affected
Amongst the worst affected small businesses are those in the construction, administration and retail sectors, which have been hit with rising cost burdens from wage increases and employer pension auto-enrolment costs. The construction sector in particular has also suffered from endemic late payment practices across the industry, with larger companies routinely leaving suppliers out of pocket for as long as 120 days. The construction sector saw the highest rate of small businesses falling insolvent in the first three months of the year, with insolvencies up 0.6% overall in 2018.
16% of businesses in significant distress
Warning of the risks facing small businesses, the Insolvency Service reports that nearly half a million UK companies are currently in significant financial distress, with 484,000 firms – representing 16% of all businesses in Britain – at risk. Mike Cherry, chairman of the Federation for Small Businesses, said of the statistic: “These latest figures show the immense strain that small businesses are currently under,” attributing the problem to “rising employment costs and unfair business rates as well as significant uncertainty as a result of the Brexit process.” Mr. Cherry noted: “Both the total number of new company insolvencies as well as underlying total insolvencies have reached their highest levels since 2014, which highlights the ongoing turbulence that small firms are now up against.”
Against this backdrop, it is more important than ever for SMEs to take measures to guard against the risks of falling into significant financial distress and insolvency. Companies are advised to strengthen their credit management processes as much as possible, ensuring swift recovery of late payments and streamlining their overheads in order to maintain a good liquidity cushion and mitigate the risks of their sector.
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Are you owed money by a someone in danger?
With pressures on the UK economy, it is essential that you stay on top of the credit limits you grant your customers and watch carefully for any late payments.
You can’t just assume they can and will pay you, no matter how big they are.
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.
See the section below – About CPA.
Are you also at risk of collapsing?
If you are struggling, rather than consider shutting down, do you realise you may have a hidden source of capital within your business waiting to be activated?
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and underused legislation your business could be due huge amounts in compensation that you didn’t even know about.
That compensation could be the cash rescue your business needed.
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 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 companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
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 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 cashflow.
Don’t let your bankers control you, contact CPA today.
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.
No matter who your customers are, 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 you 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.
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.
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!
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