Bad News For Carillion, But Not For All Business Owners
15th January 2018.
After months of uncertainty, after rescue attempt after rescue attempt; the Construction group, Carillion, has finally gone into liquidation. Over 20,000 jobs in the UK are at risk as it eventually buckled under a £1.5 billion debt pile. This is just the recent example in a long list of commercial insolvencies over the last year, as the food wholesaler, Palmer & Harvey and furniture chain Multiyork both collapsed last year.
With these in mind, here at the Credit Protection Association we strongly encourage our members to avoid falling into a similar trap. Don’t mirror the Government’s bad decisions, but conduct checks on anyone you do business with; from debtors through to suppliers.
Despite the construction group issuing three profit warnings last year, the UK Government continued awarding it with new contracts from Ministry of Defence and High Speed 2, to National Rail.
David Lidington, the Cabinet Office minister, has defended this Governmental involvement and has claimed that contracts were only awarded to Carillion with clauses to allow other companies to step in if necessary.
Bernard Jenkin, the Conservative chairman of the House of Commons Public Administration Committee, has criticised the Government for its habit of “doing contracts with companies it always does contracts with”, and in effect completely disregarding small and medium-sized companies.
The Credit Protection Association always encourages members to conduct credit checks on debtors, bringing to light all their financial skeletons and the true revenue of the business. Considering this recent disastrous commercial collapse, we encourage consistent credit checks on suppliers as well. The Government clearly did not conduct competency checks, if any at all, before awarding the construction group contracted work. If you are accepting supplies from a company without prior knowledge of their financial dealings, this could do as much damage as for late payments and bad debts.
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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