Insolvencies Rise
30th April 2018.
Personal insolvencies have hit a near six-year high while corporate failures are at their highest level since the first quarter of 2014, official figures show.
Months of slow wage growth and high inflation have left business owners struggling to continue trade in the difficult climate. High street retailers, in particular, have suffered from diminished spending as consumers reduce non-essential purchases. Experts have further suggested that bad trading last Christmas and the bad weather in the new year have contributed to low profits and even lower business confidence.
According to the government’s Insolvency Service, the number of businesses closing in the first three months of the year rose by 13 percent compared with the previous quarter and rose by 0.6 percent on last year. Individual insolvencies also saw an increase, with households still borrowing too much and saving too little.
Wages are finally growing, and inflationary pressure and political uncertainty are both easing, leaving many individuals and businesses in a stronger position than a few months ago. Despite this, businesses are still bowing out early. Consumer confidence may have improved in the first quarter of the year, but businesses are still hesitant. This timidity must be discouraged. If businesses are to wether this post-Brexit landscape risks must be taken and opportunities grasped.
At the Credit Protection Association, our debt recovery and credit management services open up opportunities as well as protect the ones already possessed. Our collections team chase down unpaid invoices, providing our members with the financial freedom to explore expansion opportunities, while our credit checks provide them with complete knowledge of who they are doing business with. We recently started investigated late payment compensation, and our LPC staff have ensured our members have been compensated for thousands.
There were 27,388 individual insolvencies in the first quarter of the year, 6.8 percent higher than the last three months of 2017 and 8.5 percent higher than the same point last year.
The majority were “individual voluntary arrangements”, a form of insolvency less severe than a bankruptcy that is associated with consumer debts. However, bankruptcies, which are associated with larger debts or sudden financial shocks, also rose.
Failures this year such as Carillion, the construction group, Maplin and Toys R Us, would have had a “domino” effect on suppliers, Duncan Swift, vice-president of the insolvency and restructuring organisation R3, added.
The Institute of Chartered Accountants in England and Wales predicted that corporate insolvencies would continue to rise this year. The organisation said that retailers had suffered as consumers cut back on spending in the new year, while there had been an increase in manufacturers announcing cutbacks and redundancies.
While the snow has since dried up, the economy has a way to go before it has completely thawed. Individual and corporate insolvencies alike are still common within the business landscape, with recent wage rises surfacing too late to make a significant impact. Business confidence needs bolstering, with many owners still using Brexit and the resulting uncertainty as an excuse not to invest.
At the Credit Protection Association, all our services are designed to not only boost our members’ business but also lay the foundations for longevity. Our debt recovery services chase down the unpaid invoices and provide the necessary funding for expansion. Meanwhile, our credit checks and company directories ascertain the absence of potential bad payers and the presence of good ones. Our new LPC department will furthermore investigate our member’s claim to late payment compensation, and will fight to the tooth to see it accomplished!
So before you sign on the dotted line and become another insolvency statistic, come to CPA and we could uncover some inner potential! This could not only prolong your lifespan but strengthen business for the better!
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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