CPA Toasts Decline In Zombie Companies
9th January 2018.
Zombie companies generate cash but not enough to pay their debt or extend to capital. They are a drag on the economy and are to be avoided by lenders and suppliers alike.
Here at The Credit Protection Association a lot of our Members and clients have found themselves exposed to bad debt when their customer cannot repay. Zombie firms are particularly dangerous because they may look thriving from the outside, but they are in fact furiously paddling under water.
Before now, it has been hard to tell how many ‘zombies’ are in the UK, but fortunately, their number has fallen to a five-and-a-half-year low.
According to a new study by R3, the insolvency trade body, the number of these ‘half-alive’ companies fell to 3 percent in December.
Not do these zombie companies put their suppliers at risk by not repaying their debts, they also provoke damage on the economy. They put the country’s growth and efficiency at risk by soaking up credit and resources that could be better applied in healthier firms.
To avoid doing business with a ‘zombie’, CPA encourages all business owners to do thorough credit checks with new customers- both for the business and the director. And most importantly, make sure you know your customer. Keep up-to-date with their company, record payment trends and immediately contact them if they are late with a payment. The CPA team are happy to help- we have a competent credit check database and our staff are happy to offer any advice!
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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