It is a sign of the times that, for some, insolvency is a preferred choice. The BBC has reported that more people are choosing insolvency because of the relief it offers from the pressure of dealing with unmanageable debt.
But while personal insolvencies soar, the picture for businesses is more complex. The stakes can be high, and, on the back of the Monarch Airlines collapse, where passengers were left stranded, there have been Government moves to tighten the rules around insolvency to tackle people’s use of it to escape tax debt, and to protect consumers.
“Insolvency may seem like a drastic solution, but a solution all the same. However, the best business decision is to fight it, by dealing with bad debt”
Bringing Bad Debt Under Control
The UK Government wants to make business rescue easier and to better regulate insolvency across sectors, where different rules can mean inconsistencies for customers.
Paul emphasises, “Regardless of regulations, for many businesses, insolvency is too high a price to pay for bad debt.”
“For a large number of SMEs across different sectors, they are already facing a heightened risk of insolvency through issues such as higher costs, a weaker pound and business rates. What they must focus on are the areas where they can bring debt under control”
For Paul, this means effective commercial debt recovery.
“Whatever pressures businesses face, the one thing they want to do is to keep the cash flow moving,” says Paul. “There are various ways of approaching this.”
“It is vital, for example, to have firm credit control procedures in place,” suggest Paul. “These can do much to ensure you don’t get to a stage where you’re facing persistent late payment but there will be occasions when payment is not forthcoming.”
“Then it’s time to look at your debt recovery options,” Paul notes. “You can make this far less strenuous and time-consuming than you might think. One solution is to outsource this function to specialists in the field.”
“Outsourcing has other benefits, including the act of deciding to use a professional debt collection agency in the first place”
“You’d be surprised how simply appointing an official debt recovery agency can galvanise debtors into action,” Paul concludes. “But the important thing is knowing that someone is taking care of this on your behalf, working to protect your business by ensuring its cash flow.”
For additional reading, please visit Why is Cash Flow Always a Problem for SMEs?