According to the Insolvency Service, there was a 115% increase in corporate insolvencies last month, compared to the same period in April 2021.
The increase from 925 registered cases follows the phasing out of the temporary insolvency measures brought in to protect companies from creditor action during the pandemic.
The insolvency industry had warned of a potential ‘debt tsunami’ from the fallout of the pandemic. It appears it is now finally here, but what does it mean for businesses and how can they ride that wave?
Inflation will continue to surge in the coming months, made worse by the recent cost of living crisis and soaring energy prices.
Seek advice to avoid the debt tsunami
It is crucial that creditors seek advice at the earliest opportunity and learn how to encourage their customers to pay invoices quicker. According to recent figures released by the Federation of Small Businesses:
- late payment is now threatening the viability of 1 in 10 businesses
- Almost 1 out of every three businesses have experienced an increase in late-paying customers over the past three months
According to figures for February 2022, the total number of company insolvencies has:
- Risen 121% compared to February 2021
- Increase 13% compared to period just before the pandemic in February 2020
Company voluntary arrangement (CVA)
The increase has been driven largely by creditors’ voluntary liquidation (CVA) procedures, which are 40% higher than pre-pandemic levels.
There’s a chance these debtors have multiple unpaid invoices, so it’s imperative that you act quickly to retrieve your funds. Being proactive increases the chances that you will get paid quicker. Here at Insolvency & Law, we are B2B debt recovery experts with an enviable track record who can help you to:
- Receive payments faster
- Act ethically appropriately while protecting your interests
Subsequently, we recommend that you contact us immediately for professional advice before attempting to ride the tsunami of debt alone.