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Pressure Mounts on Retailers as Insolvencies Rise

The number of companies going bust is expected to jump this year as the high street crisis deepens, and other parts of the economy begin to struggle.

 

Insolvencies are on the rise, leaving retailers in an even greater vulnerable position. Despite economic upturns, such as fading inflation and accelerating wage growth, low consumer confidence is still dragging down profits. As a result, British businesses are struggling to stay afloat.

With high street prospects at risk, business specialists Alvarez and Marsal have called it a “make or break moment” for retailers. A long list of high street households names has already fallen into administration, such as Poundworld and  Toys R Us, while House of Fraser, New Look, Mothercare and Carpetright have implemented life-saving Company Voluntary Arrangements (CVA).

Refocusing on cash flow and scrutinising finances is essential if retailers and restaurant owners want to protect themselves from insolvency. At the Credit Protection Association, our debt recovery services free up cash flow, while our credit checks, status reports and company directories purge finances and ensure our Members are not left at the mercy of an insolvency practitioner.

Richard Fleming, Alvarez & Marsal’s top restructuring adviser in Europe estimated that Britain will see a 15 per cent increase in insolvencies this year. The former KPMG executive added that the crisis in retail will continue but casual dining, healthcare and industrials are also facing pressures.

“The first critical factor driving this is a weakening in consumer confidence, which will accelerate over the coming months as household debt starts to bite,” he said. “The second is upward pressure on wages.”

Last week, John Lewis issued a profit warning and announced it was closing a handful of stores.

The consumer spending squeeze has also threatened the restaurant sector, forcing chains ­including Carluccio’s, Byron, Jamie’s Italian, Strada and Prezzo to come up with rescue plans. “We’re about to ­enter a make or break period for the UK high street,” said Richard Fleming, Alvarez & Marsal’s top restructuring adviser in Europe.

The high street has become a dangerous place to trade. Insolvencies are rising, with low profits failing to keep threatening the confidence of retailers and restaurant owners. The economic picture has brightened, but low consumer confidence and subsequently low profits, have ensured no retailer sees the advantage.

At the Credit Protection Association, many of our Members trade on the high street, many owning shops, restaurants and cafes. Many business owners perceive an injection of cash as the answer to their problems, which we provide for them through our debt recovery service. It is, however, our credit management products that really provide support for our Members. The CPA credit checks and status reports identify the customers with a history of bad payment behaviour, ensuring these late payers are eradicated, and our Members’ finances are swiftly repaired.

Here at CPA, we fight to the tooth for our members, particularly those who have suffered through late payment and bad payment practices. We have even created a new department within our company dedicated to getting our members rightly compensated in accordance with the Late Payment of Commerical Debts (Interest) Act 1998. This has unlocked hidden cash and potential for our members and brightened their prospects and confidence on the high street.

 

Please call us on 0330 053 9263 to discuss how CPA can help your cashflow.
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The Latest Insolvencies to 02 Jul 2018

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