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Some great results on some difficult older debts... the service has been excellent.

0010547430 (J MATTHEWS) — Tue, 07 Jan 2025 08:43:22 GMT

Great results...excellent service

Overview:

Collection House Ltd were instructed to recover a number of unpaid invoices, some dating back 3 years, for Fire and Security company. This instruction was part of an agreement we had with the Fire Industry Association.

Recommendation:

One particular case was not only 3 years old, but had been with two previous DCA's and a firm of solicitors to try and resolve. However, despite their best efforts, the monies owed remained unrecovered. Our recommendation was to write a bespoke letter to the debtors solicitors to make them aware that the debt was still outstanding and that a full and final settlement agreement of £ 7,643.75 had been accepted, but not paid.

Engagement:

Within 7 days of being instructed on the debt, our team of experienced and accredited agents, engaged with the debtors solicitors, explaining our clients position and the terms of agreement set out over 3 years ago. After a series of meetings, and despite some initial resistance, the debtor agreed to pay £ 7,643.75 as full and final settlement - this was received just 3 weeks after instruction.

"Tried out as part of the FIA initiative. Glad we did as very easy to deal with and some great results on some difficult older debts. Will be sticking with them going forward as the service has been excellent."

The process could not have been simpler. A very positive experience.

Mon, 06 Jan 2025 08:12:24 GMT

Proactive collection cycle recovers aged debt inside 24 hours

Overview:

Collection House Ltd were instructed to recover £ 1,739.00 by a Euronics Member, owed by a company that had made numerous promises and excuses but had still not paid their invoice.

Recommendation:

Having made some initial background checks, we were made aware the director had previously run companies that had gone into administration. Our recommendation was to send an initial letter of claim (via post and email) and follow this up with a call immediately. Due to the background of the debtor, we suggested that if payment is not made immediately, we should proceed with legal action against the company.

Engagement:

We made contact with the debtor immediately, who gave reasons as to why payment was not forthcoming. We explained to the debtor that our client is prepared to take legal action is payment is not made, or an agreed payment plan proposed. The debtor agreed to make an immediate payment to avoid further steps. To offer our client security, we suggested the debtor sign a 'deed of guarantee'. This deed would mean the director would be personally liable for the debt, if his company defaults.

Payment:

We received £ 750 immediately, along with the signed deed and an agreement for planned payments that will be managed by Collection House Ltd.

"The process could not have been more simple... they quickly contacted the customer and received positive results within a day. Any monies collected have been placed into our bank immediately. We have found the whole experience very positive and would not hesitate to recommend Craig and the company."

'First class service, I would recommend these guys as they get the job done.'

Mon, 06 Jan 2025 07:51:51 GMT

£ 31,616.44 recovered for 2 companies owed money by the same debtor

Overview:

Collection House Ltd were instructed by a Wiltshire-based, deluxe toilet hire company, to recover a debt of £13,889.56, owed by a production company.

Our clients had tried on numerous occasions to obtain payment from the debtor, albeit had received numerous excuses as too why payment had been delayed. Having contacted other companies working for the same employer, they were made aware that they too had not been paid. Our client contacted us to get some advice on how they could recover the outstanding sums.

Initial recommendations:

Having listened to the background of our clients debt, we gave our client two options of how to proceed. Our aim was to get our client paid first, in case the company could not afford to pay all creditors. Option 1 - send an initial letter of claim, explaining the debt and our involvement. 2 - Due to the fact the debt was not disputed, other debtors were also owed money and that payments had been promised but been not realised, we recommended a Section 122 (1)(e) Insolvency Notice. This is a notice of intent to start formal winding-up proceedings, if payment, or an agreed payment plan is not proposed. Our client decided to go with option 1.

Engagement:

Having received our correspondence and voicemails, the debtor contacted the client directly, promising payment by the following week. We followed up this proposal to suggest if payment was not forthcoming, we would proceed with a winding-up notice immediately and without warning.

On the date the payment was due, the debtor sent an email, making a number of excuses as to why it could not be made (including that he was abroad).

Recommendation:

Based on the advice we gave our client, they passed our details onto another company that was owed money by the same debtor. We liaised with them and gave them the same advice. They were also aware that other creditors had not been paid and wanted to make sure they were at the top of the list of payees. They also decided to go for option 1, and dependent on the outcome of this case, would also initiate a Section 122 (1)(e) Insolvency Notice. A letter of claim was sent to the registered address and a follow-up email sent to the debtor to make them aware we were now acting on behalf of both companies.

Escalation:

We contacted our client immediately after the payment deadline passed, recommending we issue the Section 122 and also suggested this be personally served at this registered address (which was also his home address). Once agreed by our client, documents were created and emailed to the debtor and he was made aware a process server would attend his address.

The debtor emailed immediately to say that payment would be made in full (including additional interest and compensation fees) and that we can cancel the process server - we advised this was already in place and could not be retracted. We received confirmation that the documents were served and that the debtor accepted notice and confirmed their identity.

Payment:

We received full payment (with fees) for both clients, totalling £ 31,616.44 into our account just 2 days later. Both clients were over the moon that their debts had been settled and that the recovery of late fees reduced the cost of our commission.

'First class service, I would recommend these guys as they get the job done, I contacted Craig as suggested by a friend to recover a large unpaid invoice, and not only did they do it very quickly but they also got late payment and interest fees which pretty much cover the collection costs, great job!!'

Extremely professional, friendly and they always manage to get positive results.

Fri, 03 Jan 2025 08:52:51 GMT

£21,154.66 recovered for unpaid VAT despite change in company structure

Overview:

Collection House Ltd were instructed to recover £ 21,154.66 form an Academy, which had underpaid VAT. The payment had been outstanding for over 2 years and the Academy had changed name as well as board members since this time.

Recommendation:

Naomi (Collection agent) had suggested issuing a standard letter of claim, using the information provided by the client. Having sent details of the claim via post and email, she made an initial call to the Academy to explain the debt.

Engagement:

Initially, the debtor denied liability for the amount owed as the school had changed name and moved to a new academy trust, however Naomi pointed out that the original school was not dissolved and the company registration number has remained the same and therefore the school is still liable for the debt. After numerous calls and emails to the debtor, along with providing evidence of the outstanding sums and how they originated, the debtor agreed to pay the full amount of £ 21,154.66.

"I have used Collection House for over 20 years and I have always found them extremely professional, friendly and they always manage to get positive results. When I have changed jobs Collection House is the company I use when I need that extra help to collect older debts. Louise Tan was exceptional, keeping me informed of the progress of the debt and confirming when the debt was paid. I would recommend using Collection House every time. Thank you"

UK Business Insolvency rises by nearly a third

Mon, 06 Feb 2023 11:17:40 GMT

UK Business Insolvency rises by nearly a third

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales were 32% higher than in the same month in the previous year (1,489 in December 2021) and 75.5% higher than December 2019 (1,119).

UK Business insolvency fell 3.25% in December 2022 to a total of 1,964 compared to November’s total of 2,029. They were 31.9% higher than in December 2021 (1,489) and 75.5% higher than December 2019 (1,119).

In December 2022, there were 1,659 Creditors’ Voluntary Liquidations (CVLs), 22% higher than in December 2021 and more than twice as many as December 2019 (pre-pandemic). Numbers of administrations and Company Voluntary Arrangements (CVAs) remained lower than before the pandemic but were higher than in December 2021, whilst compulsory liquidations in the month were more than three and a half times as many as in December 2021.

HMRC debt collection action

The increase in HMRC winding-up petitions has been named as the cause behind the increase in Uk Business insolvency.

There were 183 compulsory liquidations in December 2022, more than three and a half times as many as in December 2021 and 8% higher than in December 2019. Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus (Covid-19) pandemic, partly as a result of an increase in winding-up petitions presented by HMRC.

Of the 1,964 registered company insolvencies in December 2022 there were 1,659 CVLs, which is 22% higher than in December 2021 and 111% (2.1 times) higher than in December 2019, 183 were compulsory liquidations , which is 259% (3.6 times) higher than December 2021 and 8% higher than December 2019. 10 were CVAs, which is 43% higher than December 2021 but 52% lower than December 2019. There were 112 administrations, which is 56% higher than December 2021 but 20% lower than December 2019; There were no receivership appointments.

Fall in UK corporate insolvencies

Commenting on the Uk Business insolvency figures Christina Fitzgerald, President of R3 said “The monthly fall in corporate insolvencies is driven by a fall in Compulsory Liquidation and Administration numbers. However, UK corporate insolvencies have increased compared to last year and three years ago due to an increase in Creditor Voluntary Liquidation and Compulsory Liquidation numbers.”

“This is due to a combination of directors choosing to close their businesses and creditors chasing unpaid debts due to changes in legislation as both ends of the supply chain remain squeezed by ongoing issues around consumer confidence, rising costs, and requests for increased wages.”

“December and January are critical periods for many firms, and these issues, combined with strikes, bad weather and the economic challenges the UK has faced over the last three years may have dealt a further blow to businesses and business owners.”

“These challenges aren’t going to go away overnight – and directors are very concerned about the effects of energy and staff costs, as well as fears about how the cost of living crisis will impact on their income this year.”

Gareth Harris, Partner at RSM UK Restructuring Advisory, said ‘In December 2022 company insolvencies have remained very high in historic terms, continuing to be driven by shut down liquidations (CVLs) of smaller companies and HMRC compulsory liquidations.”

‘However, this is, in reality, just the “excess insolvencies” that were suppressed during the pandemic and the times of unprecedented government support . What we are yet to really see is an increase in those good, slightly larger companies who are now struggling due to the toxic combination of accumulated debt, high interest rates, inflation, labour shortages and supply chain issues.”

“‘Whilst these companies are struggling it will take a few months yet before they are reflected in the insolvency/administration figures, but sadly it now seems inevitable that many will have to go through that process to restructure.”

Mark Supperstone Managing Partner at Resolve said “The ONS figures today follow the trend we have seen over the past few months with insolvencies at a heightened level compared to 2021. It can be hard to see a positive path ahead for SMEs, however, there is a glimmer of hope in these figures as insolvency numbers are broadly flat on a month-on-month basis (1,964 in December 2022 versus 2,029 in November 2022). With cost pressures potentially starting to ease, the year ahead could be brighter than many are predicting.”

Hire a Debt Collection Agency

Small Businesses are urged to consider utilizing debt collection services if they’re owed money. Instances of UK Business insolvency is rapidly rising. It is well known that unpaid business invoices are the silent killer of thousands of SME’s every year that could be saved by taking action. Call Collection House Ltd today on 01225 762044, or email: response@collectionhouse.co.uk

Source: Credit Connect/UK Debt Collection News

Large write-off of unpaid business debt

Sun, 20 Nov 2022 19:51:15 GMT

Cardiff Council to write-off more than £1 million

Cardiff Council has voted to write-off "irrecoverable" debts amounting to over £1 million owed to it through taxes on non-domestic properties. Cardiff Council's cabinet voted to authorise the write-off of non-domestic rates debts totalling £1,282,187.71

Income from non-domestic rates – which are taxes paid on non-domestic properties, like shops, offices, pubs and factories – pays for vital council services such as social care and education.

In Wales, non-domestic rates income is collected, paid into a National Pool for Wales and redistributed back to local authorities on a per capita basis.

This year Cardiff Council is responsible for billing and collecting about £195 million worth of non-domestic rates.

A cabinet report on the proposed writing off of the debts said that "there are occasions where collection of the full tax is not possible resulting in the writing off of the outstanding debt."

The report continues: “This course of action is taken only after all possible recovery options have been exhausted.

“These include sending reminders, final notices, and the obtaining of liability orders from the Magistrate’s Court, which then entitles the authority to instigate further action such as bankruptcy/liquidation proceedings or the ability to levy distress.”

Insolvency Statistics for October 2022

Tue, 15 Nov 2022 21:31:14 GMT

Latest figures from the Insolvency Service

The number of registered company insolvencies in October 2022 was 1,948. This was 38% higher than in the same month in the previous year (1,410 in October 2021), and 32% higher than the number registered three years previously (pre-pandemic; 1,477 in October 2019).

There were 242 compulsory liquidations in October 2022, which is more than 4 times as many as in October 2021 and 2% higher than in October 2019. Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus (COVID-19) pandemic, partly as a result of an increase in winding-up petitions presented by HMRC. October 2022 was the first time that the number of compulsory liquidations was similar to the pre-pandemic comparison month. This was partly caused by a large number of petitions from a single bank, which accounted for 45 of the compulsory liquidations in this month.

There were also 1,594 Creditors’ Voluntary Liquidations (CVLs), 28% higher than in October 2021 and 53% higher than October 2019. Numbers of administrations and Company Voluntary Arrangements (CVAs) remained lower than before the pandemic.

For individuals there were 531 bankruptcies registered, which was 14% lower than in October 2021 and 62% lower than October 2019.

There were 1,894 Debt Relief Orders (DROs) in October 2022, which was 2% lower than October 2021 and 25% lower than the pre-pandemic comparison month (October 2019).

On average, there were 7,610 Individual Voluntary Arrangements (IVAs) registered per month in the three-month period ending October 2022, which is 8% higher than the three-month period ending October 2021, and 13% higher than the three-month period ending October 2019. IVA numbers have ranged from around 6,300 to 7,800 per month over the past year.

When to instruct Collection House?

Wed, 09 Nov 2022 13:13:59 GMT

And what about late payment fees?

When should you instruct a debt recovery agent? Statistically, the longer an invoice goes unpaid the harder it becomes to collect.

If you have an overdue debt and you’ve made numerous efforts to secure payment, such as sending invoice reminders and making telephone calls, and yet the invoice is still unpaid, then then the sooner you instruct Collection House, the better.

As every business is different it’s up to you to decide which invoices will best benefit from our assistance. These could be invoices of particularly high value, invoices that belong to a customer you simply cannot track down or maybe one with multiple invoices outstanding.

By instructing Collection House you can focus your business resources on other areas, such as newer invoices, or on other areas such as marketing.

So, what about late payment fees?

Under the Late Payment of Commercial Debts (Interest) Act 1998 (as amended), you are entitled to claim compensation and interest at 8% above the Bank of England's base rate on each of your late paid invoices. However, if you have a clause relating to late payment interest in your terms and conditions, you must charge any interest to be in line with that amount.

So, how do late payment fees work under the legislation? You are able to claim statutory interest which is 8% plus the current Bank of England base rate. In addition to interest, you can also claim compensation under The Late Payment of Commercial Debts Regulations 2013 to help recover “reasonable debt recovery costs”.

The amount of compensation you can claim under the Act is:

· For invoices or debts up to £999.99, you can claim £40 per invoice

· For invoices or debts between £1,000 - £9,999.99, you can claim £70 per invoice

· For invoices or debts over £10,000.00, you can claim £100 per invoice

Collection House operate on a NO WIN NO FEE basis for uncontested debts. We have been collecting late payment fees for our clients for years and unlike other debt recovery agencies, we pass all late payment fees collected to you, our client.

It’s easy to instruct us: call us on 01225 01225 762044, instruct us online or email us at response@collectionhouse.co.uk

UK Suppliers refusing orders due to late payments

Sun, 30 Oct 2022 19:51:42 GMT

Late payments damaging business relationships

A survey conducted by Ivalua finds that 6 in 10 UK businesses (59%) said suppliers had terminated their relationships with them due to repeated late payments, and 62% said paying suppliers late had significantly damaged relationships.

Two-thirds of businesses (67%) feared a “global cashflow crisis” would occur if firms continue to pay late.

Stephen Carter, director at Ivalua, said: “Similar to when Covid-19 hit, and now with rising energy bills, the financial strain businesses and suppliers are under means we are facing the risk of another cashflow crisis. Timely payments are critical to gain favour with suppliers, helping to open the door to better collaboration.”

The study also found a third (35%) of businesses had a “severe lack of visibility” into payments, compounded by 58% reporting a disconnect between procurement and finance teams, making it hard to ensure suppliers are paid on time.

This lack of visibility created further problems, with the biggest being an increased risk of fraud (64%), being unable to use payments strategically (50%), and an inability to implement milestone or staged payments (47%).

Carter continued: “As businesses across all industries struggle with rising bills, it’s vital that they work to improve visibility into supplier payments and drive operational efficiencies. Using payments strategically and maintaining a collaborative relationship with suppliers will help businesses to manage a cashflow crisis, even as supply chains come under increasing pressure.”

16% in Company Insolvencies

Mon, 17 Oct 2022 19:46:41 GMT

UK insolvencies rise 16%

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales increased by 16% in September when compared to the same month in the previous year (1,453 in September 2021), and 11% higher than the number registered three years previously (pre-pandemic; 1,508 in September 2019).

In September 2022 there was a total of 1,679 company insolvencies in England and Wales, which included:

1,379 creditors’ voluntary liquidations (CVLs)
204 compulsory liquidations
85 administrations
11 company voluntary arrangements (CVAs)
0 receiverships

The 1,379 Creditors’ Voluntary Liquidations (CVLs) was 4% higher than in September 2021 and 25% higher than September 2019.

204 were compulsory liquidations, which is 538% (6.4 times) higher than September 2021, but 10% lower than September 2019, 11 were CVAs, which is 8% lower than September 2021 and 50% lower than September 2019.

85 administrations were recorded, which is 5% higher than September 2021 but 47% lower than September 2019; and there were no receivership appointments

Ministerial position scrapped by Truss Government

Thu, 13 Oct 2022 19:02:06 GMT

Small business position scrapped by Government

Looking after the interests of small businesses has been downgraded by the Truss government as it now forms part of a much wider role, being one of 16 areas covered under the new position of “Minister for Enterprise and Markets”.

Dean Russell MP has been appointed Minister for Enterprise and Markets in the Department for Business, Energy and Industrial Strategy, whose 16 responsibilities include postal affairs, consumer and competition policy, Pubs Code Adjudicator and Brexit opportunities.

This is the first-time small businesses have not had a dedicated ministerial title since the last Labour government. Mr Russell’s predecessor, Paul Scully MP, was the parliamentary under-secretary of state for small business between February 2020 until now.

Tackling late payments was one of the key roles of the Small Business Commissioner. Rightly so, as late payments are the single biggest killer of small businesses.

The new Minister for Enterprise and Markets, Dean Russell MP, has pledged that he “…will continue to champion our innovative and hardworking small business community ensuring they have a voice at the heart of government”.

Corporate insolvencies rise 5.5% in August 2022

Mon, 26 Sep 2022 18:21:29 GMT

Corporate insolvencies rise

Corporate insolvencies rose 5.5% in August on the previous month’s figures, according to the government’s latest statistics published on 16th September.

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales increased by 5.5% in August 2022 to a total of 1,933 compared to July’s total of 1,832. This is an increase of 43.4% compared to August 2021’s figure of 1,348.

The number of registered company insolvencies in August 2022 was 43% higher than in the same month in the previous year (1,348 in August 2021) and 42% higher than the number registered three years previously (pre-pandemic; 1,365 in August 2019).

Of the 1,933 registered company insolvencies in August 2022 there were 1,662 CVLs, which is 33% higher than in August 2021 and 73% higher than in August 2019. 142 were compulsory liquidations, which is 274% (3.7 times) higher than August 2021, but 27% lower than August 2019. 13 were CVAs, which is 550% higher (6 and half times higher) than August 2021 but 57% lower than August 2019. There were 116 administrations, which is 111% (2.1 times) higher than August 2021 but 34% lower than August 2019 and there were no receivership appointments.

Christina Fitzgerald, President of the insolvency and restructuring trade body, R3, said:

“The monthly increase in corporate insolvencies – to the third highest set of monthly statistics since January 2019 – has mainly been caused by an increase in the number of Creditors’ Voluntary Liquidations.

“This suggests that directors remain concerned about their ability to continue to trade in the current climate, and are choosing to close their businesses before that choice is taken away from them.

“These figures will be a sobering reminder to government of the scale of the challenge facing the UK economy as we head into the winter months, and reflect the continued toll the sustained economic turbulence is taking on businesses in England and Wales.

“Companies are facing enormous running cost hikes just as household spending is facing its biggest squeeze in several decades which delivers yet another blow to business owners who were hoping to bounce back to normal trading levels post-pandemic.

“Many directors and managers are worried about the rise in prices and energy costs and the effect these will have on their margins and profits, and this is set to continue to be a concern.”

Personal insolvencies also rose in August, with 565 bankruptcies registered, up 10% on the previous year, but still below pre-pandemic levels. 7,340 IVAs were registered per month in the three-month period ending August 2022, along with 1,932 Debt Relief Orders, and 6,058 registrations to the government’s Breathing Space scheme to protect individuals from creditor action, highlighting the effect of the cost-of-living crisis on personal finances.

Card Transaction Data for June 2022

Mon, 26 Sep 2022 18:18:24 GMT

Credit card spending increases

Annual data comparisons are impacted by the reduction of spending due to various lockdown restrictions and the economy re-opening, resulting in large percentage variations when compared to 2021.

Card transactions by UK cardholders both in the UK and overseas, as per UK Finance:

There were 1.8 billion debit card transactions in June, 1.9 per cent fewer than in June 2021. The total spend of £56 billion was 8.5 per cent lower than June 2021.
There were 343 million credit card transactions in June, 10.7 per cent more than in June 2021. The total spend of £19 billion was 18.7 per cent higher than June 2021.
Outstanding balances on credit card accounts have grown by 10.9 per cent over the twelve months to June and 51 per cent of outstanding balances incurred interest compared to 53.3 per cent twelve months ago.

Card transactions made in the UK by cardholders from both the UK and from overseas countries:

There were 2 billion debit and credit card transactions in the UK in June, 9.1 per cent more than in June 2021. The total spend of £71.3 billion was 5.7 per cent higher than June 2021.
Contactless payments accounted for 60 per cent of all credit card and 74 per cent of all debit card transactions.
There were 1.4 billion contactless card transactions in June, 23.2 per cent more than the 1.2 billion in June 2021. The total value of contactless transactions was £21.7 billion in June, a 52.6 per cent increase on £14.2 billion in June 2021.
The number of contactless credit card transactions was 37 per cent higher than June 2021. The number of contactless debit card transactions was 21.2 per cent higher than June 2021.

“Write off debts” scams targeting consumers

Wed, 21 Sep 2022 19:43:26 GMT

Fraudsters target those in financial difficulty

The Financial Conduct Authority has said it believes there are firms offering unauthorised claims management services to people in the UK.

These firms offer - often for a fee (and even when the scheme fails) - to “write off” debts such as mortgages, and get compensation for consumers from their lenders. This may include reclaiming past payments of capital and interest.

As part of this, the firms may try and convince individuals by pointing to ideas such as “Strawman”, “Freeman of the Land” and “Sovereign Citizen” - all of which promote the belief the government and laws of a country have no powers over people.

In times of economic hardship, fraudsters use these ideas to appeal to people facing financial difficulties who may be looking for a way out of their debt, the FCA warned and told individuals to be cautious of any firms offering to write-off debt.

Almost all firms and individuals offering, promoting or selling claims management services in the UK must be authorised or registered by the FCA, with the companies offering the services highlighted above are unlikely to be authorised and are targeting people in the UK.

Creditor bankruptcy and liquidation petition deposits to rise

Wed, 07 Sep 2022 21:03:23 GMT

Fees to rise from 1st November 2022

The Insolvency Service is making changes to the deposits paid to initiate creditor bankruptcies and compulsory liquidations following The Insolvency Proceedings (Fees) (Amendment) Order 2022, which was laid in parliament on 5 September 2022.

The fees have not changed since April 2016 and insolvency case numbers have fallen to a historically low level, according to The Insolvency Service, with the majority of the remaining cases having insufficient asset values to recover the administration costs.

The petition deposit is the amount that needs to be paid up-front to seek an order and is set to increase on all cases where a petition is filed at court on or after 1 November 2022.

It should be noted, however, that there will be no change to the adjudicator petition deposit where the individual applies for their own bankruptcy.

Creditors’ bankruptcy petition deposit will rise from to £990 to £1,500, and Company liquidation petition deposit will rise from £1,600 to £2,600.

Insolvency Statistics for July 2022

Wed, 24 Aug 2022 21:24:35 GMT

Company insolvencies rise

The Insolvency Service has released the latest insolvency statistics for England and Wales for July 2022. The number of registered company insolvencies in July 2022 was 1,827 which is 67% higher than in the same month in the previous year (1,096 in July 2021), and 27% higher than the number registered three years previously (pre-pandemic; 1,440 in July 2019).

In July 2022 there were 1,609 Creditors’ Voluntary Liquidations (CVLs), 60% higher than in July 2021 and also 60% higher than July 2019. Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were 3 times as many compulsory liquidations in July 2022 as in July 2021, and the number of administrations was twice as high as a year ago.

For individuals there were 531 bankruptcies registered, which was 16% lower than in July 2021 and 64% lower than July 2019.

There were 1,835 Debt Relief Orders (DROs) in July 2022, which was similar to July 2021 but 23% lower than the pre-pandemic comparison month (July 2019).

On average, there were 7,608 IVAs registered per month in the three-month period ending July 2022, which is 11% higher than the three-month period ending July 2021, and 4% higher than the three-month period ending July 2019. IVA numbers have ranged from around 6,300 to 7,800 per month over the past year.

There were 6,112 Breathing Space registrations in July 2022, which is 10% higher than the number registered in July 2021. 5,994 were Standard breathing space registrations, which is 10% higher than in July 2021, and 118 were Mental Health breathing space registrations, which is 34% higher than the number in July 2021.

The Insolvency Service concludes that “… from the start of the coronavirus (COVID-19) pandemic until mid-2021, overall numbers of company and individual insolvencies were low when compared with pre-pandemic levels. This is likely to have been partly driven by government measures put in place to support businesses and individuals during is time. While CVL numbers are now higher than pre-pandemic levels, numbers for other insolvency procedures, such as compulsory liquidations for companies and bankruptcies for individuals, remain lower.”

Late payments could slow investment from SMEs

Mon, 22 Aug 2022 19:16:42 GMT

Small Business Commissioner issues warning

The Small Business Commissioner, Liz Barclay, has issued a warning that without confidence in cash flow, the UK’s small and micro businesses would be restricted from investing in new jobs, equipment and training, or risk closing.

Discussing the matter with Saltare CEO, Anthony Persse, Liz Barclay raised the issue of late payments hindering small and micro businesses, because often they’re forced to stretch funds if invoices are delayed or paid late. This adversely affects budgets for new staff or research and development.

“If we look economically, small businesses are put at risk and can’t manage their cash flow if they don’t have payment certainty or know when payments will be made. This means they either have to stretch their funds or look elsewhere for funding, and this limits their investments not just in business growth but business-as-usual functions.”

In addition to the strain put on business owners’ books through late payments, Liz also raised the issue of the mental health challenges business owners face through not having sufficient cashflow.

Anthony Persse, CEO of Saltare said: “Chatting to Liz, really brings home how important it is for business leaders and policymakers in the UK to prioritise paying on time. Early payment and the certainty of payment ease cashflow concerns and improves the likelihood of future success and growth. Conversely, poor cashflow and poor payment practices ultimately leads to business failure and insolvency.”

Credit card and loan rates near 20-year high

Tue, 19 Jul 2022 21:32:48 GMT

Borrowers face increased rates

People turning to credit cards and loans to cope with the cost of living crisis are being hit by higher interest rates. The average credit card rates hit 21.43% in June, with this an 0.87 percentage point rise on a year ago when the average credit card rate was 20.56%.

Analysis by Freedom Finance shows the rate is approaching levels not seen since 1998, with this the last time that average rates surpassed 21.5%.

Data on personal borrowing shows that the average rate of a £10,000 loan is an interest rate of 4.11%, compared to 3.43% a year ago. For someone taking out a £5,000 personal loan, typical rates have risen from 7.84% to 8.2%.

David Hendry, chief marketing officer at Freedom Finance, said: “ The latest consumer credit data paints a gloomy picture with the cost of borrowing continuing to increase as inflation spikes and the Bank continues to hike interest rates.” Ponting to record overdraft rates and climbing credit card and personal loan rates, he warned: “It all adds up to a painful situation for household incomes and budgets.”

Record number of housebuilders going bust

Tue, 12 Jul 2022 16:11:43 GMT

Concerning news for housebuilders as firms struggle

A total of 360 housebuilders went bust last year reaching record new highs, as smaller firms struggled to cope with rising costs and backlogs in the planning system and jeopardising the much-needed supply of new homes.

This equated to a 75% increase on the year before, according to accountancy firm Price Bailey, which collected data from the Insolvency Service under a Freedom of Information Act request.

The cost of building a house has risen sharply in the last 18 months due to rising prices for steel, timber and plaster and a shortage of skilled staff also means that companies are having to pay increased rates for bricklayers, plasterers and electricians.

Larger firms have been able to use their scale to profit from the boom in the market, which has pushed house prices to new highs.

Price Bailey highlighted that smaller builders had been “disproportionately harmed” by a number of factors, including cost inflation and spiralling wages, The Times reports.

Matt Howard of Price Bailey said if smaller developers kept going under, the government’s target of building 300,000 new homes every year “looks increasingly unobtainable”.

He added: “ Many housebuilders are tied into fixed-price contracts which quickly become under-priced as inflation eats away at margins. Larger builders with multiple sites can offset losses from underpriced developments, but small housebuilders with a single site may have no option but to deliver houses at a loss.”

More Households in Financial Difficulty than during the pandemic

Mon, 11 Jul 2022 22:10:07 GMT

More households in financial difficulty

A study from Abrdn Financial Fairness Trust and Bristol University has found that there are 1.6 million more UK households facing "serious financial difficulties" today, than at the end of October 2021.

One in six households (total of 4.4 million) are struggling and in “serious financial difficulties” across the entire population. This is 1.6 million more than the last time the study of 6,000 households reported in October 2021.

Most surveyed had reduced the quality of their food intake, a quarter have cancelled insurance and a third have pawned possessions, according to the research.

Credit card debt is rising and a quarter have zero savings. Single parents, renters, disabled people and families with three or more children are worst affected.

Households considered “secure” have dropped from 38% to 31%. In Wales and Scotland, more than one in five households are suffering “serious difficulty”, with England and Northern Ireland slightly worse affected.

Households with income in excess of £100,000 per annum are the only group in less financial strife since last October.

The hardship has been driven by soaring energy bills, transport costs and groceries – in that order.

“ This is the first substantial deterioration we have seen since tracking people’s finances when the pandemic started,” said Mubin Haq, the chief executive of Abrdn Financial Fairness Trust.

“Times are tough for everyone, but it’s those on the lowest incomes who are particularly feeling the effects of rising prices.”

Company Director disqualified for 10 years

Mon, 11 Jul 2022 22:04:15 GMT

10 year ban for Director

Originally from Latvia, Grigorijs Hacaturjancs, has been disqualified as a director for 10 years after fraudulently claiming a £50,000 Bounce Back Loan.

Mr Hacaturjancs was a director of Beauty&Melody Shop Ltd which was incorporated in 2015 and operated as an online retailer for hair and beauty products. The company was not related to the London-based chain of hair and beauty salons of the same name.

Despite company accounts showing that the company had ceased trading in 2019 and had shut down its website, Hacaturjancs applied for a £50,000 Bounce Back Loan (BBL) in May 2020 on behalf of the company.

Businesses were only eligible for support through the BBL scheme if they had been adversely impacted by the pandemic lockdown, meaning online-only retailers such as Beauty&Melody could not apply.

Furthermore, he inflated the company’s turnover on the BBL application in order to secure the maximum £50,000 available through the scheme. Beauty & Melody went into voluntary liquidation in July 2021 shortly after which the liquidator passed on concerns to the Insolvency Service regarding Grigorijs Hacaturjancs’ conduct.

Investigators discovered that the last sale by Beauty&Melody was on 23 March 2019, with no further money being paid into the company bank account after that date until the receipt of the £50,000 Bounce Back Loan in May 2020.

Shortly after this, a payment of nearly £50,000 was made to a company based in Slovakia. Hacaturjancs told investigators that this was to a company supplier, although Beauty&Melody had never done business with this company before, and it received no goods or services in return for the payment.

The Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from Grigorijs Hacaturjancs, after he admitted his company had been insolvent in 2019.

His disqualification is effective from 12 July 2022 and lasts for 10 years.

The disqualification undertaking prevents Hacaturjancs from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.

Dave Elliott, Chief Investigator at the Insolvency Service said:

"Mr Hacaturjanc’s disqualification should act as a deterrent to others who think they can profit by obtaining taxpayer-backed loans to which they are not entitled."

The liquidator has determined that Hacaturjancs has no personal assets, however the possibility of applying for a compensation order will remain under review.

Remortgage sales highest since Pandemic

Thu, 30 Jun 2022 22:10:09 GMT

Remortgaging and debt consolidation on the rise

Latest data from the Financial Conduct Authority (FCA) show remortgage sales in the last quarter of 2021 have reached their highest level since before the outbreak of the pandemic.

In Q4 2020 there were 92,558 remortgage sales. This outnumbered all other types of home loans for the first time since Q3 2020.

Meanwhile, sales of mortgages for first-time buyers hit 112,005 while house mover mortgages totalled 133,890. Both first-time buyer and house-mover mortgages reached a five-year peak in Q2 2021, but slumped in Q4 to 89,542 and 75,726 respectively.

With higher-rates and a slowing property market, Freedom Finance chief commercial officer Andrew Fisher says these will further drive remortgage growth in 2022, while debt consolidation could also contribute to activity in the remortgage and second charge markets.

Fisher says: “Since late-2020 mortgage sales for first-time buyers and home-movers rocketed due to pent-up demand from the first lockdown combined with stamp duty cuts, the ability for many households to save more money and a change in working habits driving a race for space.”

He explains that the latest data indicates that the housing market started to return to pre-pandemic trends in the final quarter of 2021 with remortgage sales outnumbering all other types of home loan.

“The gloomy economic environment and the consecutive rate rises from the Bank of England are only likely to drive further demand in the remortgage market as borrowers look to lock in to fixed-rate loans either from variable rate mortgages or as their existing deals come to a close.”

The second charge mortgage market is also seeing rapid growth this year, with the value of new business reaching £127m in April 2022, marking a 54% increase compared to the year prior.

Fisher suggests that as the cost of borrowing rises, squeezing household budgets even further, debt consolidation is becoming more common.

“Second charge mortgages and remortgaging could therefore be an increasingly favourable method of clearing or reducing existing debts for homeowners looking to capitalise on the house price boom from the pandemic and get through the cost-of-living crisis,” he adds.

Personal bankruptcies decline, business insolvencies rise

Sun, 26 Jun 2022 17:42:13 GMT

Big jump in business insolvencies

Business Insolvencies have continued to rise yet personal bankruptcy numbers have dropped, as shown in the latest figures from the Insolvency Service.

Whilst personal bankruptcies dropped in comparison to the same period for last year, it was not the same for businesses. Business Insolvencies have risen dramatically, mainly due to the ending of Business support through the pandemic.

The number of registered company insolvencies in May 2022 was 1,817. This was 79% higher than in the same month in the previous year (1,014 in May 2021), and 34% higher than the number registered three years previously (pre-pandemic; 1,352 in May 2019).

In May 2022 there were 1,584 Creditors’ Voluntary Liquidations (CVLs), 70% higher than in May 2021 and 66% higher than May 2019. Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were four times as many compulsory liquidations in May 2022 compared to May 2021, and the number of administrations was 95% higher than a year ago.

For individuals, 566 bankruptcies were registered, which was 23% lower than in May 2021 and 61% lower than May 2019.

There were 2,030 Debt Relief Orders (DROs) in May 2022, which was 33% higher than in May 2021 but 11% lower than the pre-pandemic comparison month (May 2019). The increase compared to last year is linked to changes to the eligibility criteria on 29 June 2021 including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000. In the 11 months since the change in DRO eligibility criteria, an estimated 7,787 individuals have had a DRO approved who would not have previously been eligible.

There were, on average, 7,812 IVAs registered per month in the three-month period ending May 2022, which is 6% higher than the three-month period ending May 2021, and 10% higher than the three-month period ending May 2019. IVA numbers have ranged from around 6,300 to 7,800 per month over the past year.

Personal loan rate rise

Sat, 11 Jun 2022 21:35:12 GMT

Overdraft rates also on the increase

The latest analysis from Freedom Finance shows the average rate for a £10,000 personal loan was 4.06% in May 2022. This percentage is the highest it has been since September 2016 when it was at 4.11%.

Personal loans worth £5,000 have also increased to recent highs with an average quoted rate of 8.35% last month - a level not witnessed since March 2017 when it was at 9.54%.

The average overdraft rates substantially increased in April 2020 to 30.47% compared to 24.21% the previous month following new regulations that required firms to charge a simpler annual interest rate.

More recently overdraft rates have risen to record highs - with average rates hitting 35.26% in May 2022. This is a significant rise from the 34.12% recorded in April 2022 which was in itself the first time rates had exceeded 34%.

According to Freedom Finance’s chief marketing officer David Hendry, the data demonstrated the economic environment was having an impact on the cost of consumer credit borrowing. He explained: “The Bank of England is raising interest rates to try and limit inflationary pressures, but the cost of borrowing is also growing.

“It is a further blow for consumers who are starting to see noticeable increases in mortgage and other consumer credit rates. Personal loans are now at their highest level in over five years while overdraft rates continue to reach new records.

“For people with existing debt or struggling to make ends meet, it is vital that they are thinking about how they reduce their repayments on existing credit by finding the best possible rates available to them.”

Invoice late payment surge across the UK

Fri, 10 Jun 2022 10:13:35 GMT

Late Payment on the increase in UK regions

As the UK’s economic situation continues to worsen, businesses across the UK face a front-line battle against invoice late payment as businesses fail to pay on time.

According to latest research from insolvency and restructuring trade body R3 which was based on an analysis of data provided by CreditSafe, there has been a steady rise in debts owed by companies in liquidation over the last four months.

In Yorkshire and Humberside there has been a 90% increase, rising from 120 companies in December 2021 to 228 in April. This equates to just under £1.4m of debt owed last December which increased to £2.4m last month.

The growing bad debt figures in Yorkshire and Humberside were reflected across much of the UK with four other regions with higher numbers of debts owed by companies in liquidation: Greater London (354); North West (280); West Midlands (270); and South East (243).

Looking at another indicator of worsening financial distress, late payment of invoices, R3’s analysis of the CreditSafe data also showed continuing problems with this issue as around 51,000 companies in Yorkshire and Humberside once again proved unable to meet their payments on time in April.

Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments: “After two very tough years for businesses, unfortunately, the economic prospects look far from encouraging with energy prices soaring, rising inflation and living standards being squeezed.

“We are once again hearing economists talk of stagflation and, with the shadow of another recession appearing to be getting closer, we are already seeing growing signs of pressure on businesses here.

“Amid the backdrop of weak economic growth as the Ukraine crisis looks set to continue, businesses would be well advised to keep a close eye on their cash flow, particularly given the high number of late payments in the region. In addition, since December, we have also seen growing levels of debt with almost double the number of companies in liquidation owing creditors.

“With living standards expected to take their biggest hit for decades, consumer spending is likely to fall, impacting almost every sector, and we urge businesses to seek professional advice at the first signs of financial problems when more options will be available to them.”

Many Small Businesses at Risk

Tue, 07 Jun 2022 11:49:48 GMT

FSB issues warning as small businesses struggle

Increasing running costs are continuing to place a heavy burden on small businesses according to the Federation of Small Businesses (FSB). They have issued a warning that around 500,000 small businesses are at serious risk of going bust within the next few weeks without new government support.

FSB Chairman Martin McTague said on BBC Radio 4’s Today programme. “…there is still a massive problem with small businesses. They are facing something like twice the rate of inflation for their production prices, and it’s a ticking time bomb. They have got literally weeks left before they run out of cash and that will mean hundreds of thousands of businesses, and lots of people losing their jobs.”

McTague referenced figures from the Office for National Statistics, which showed that 40%, of the UK’s small businesses had less than three months’ worth of cash left to support their operations. Of those 2m, the FSB chairman said about 10% – or 200,000 – were in “serious trouble”, and that another 300,000 “have only got weeks left”.

He said: “It is a very real possibility because … they don’t have the cash reserves. They don’t have any way they can tackle this problem.”

Consumer price inflation hit 9% in April, the highest level since 1982. Costs have been driven higher by a jump in energy bills, record petrol prices and the rising cost of a weekly shop. The Bank of England has estimated inflation will peak at about 10% later this year.

Businesses have also faced continually rising costs, with factory input prices increasing by 18.6% over the past year, a record high. Many firms are raising their prices in response, feeding into inflationary pressures across the country.

UK insolvencies predicted to rise

Mon, 23 May 2022 20:52:56 GMT

Gloomy news for UK business

Trade credit insurance provider, Allianz Trade, have predicted that business insolvencies will increase 37% this year, which would see the UK becoming the first big European economy to reach pre-pandemic levels of corporate insolvencies.

The withdrawal of government Covid support schemes, rising energy and fuel costs, supply chain issues, the ongoing war in Ukraine, and Brexit, are all being listed as the main factors for the predicted wave of insolvencies.

Allianz Trade say global factors will likely push business insolvencies up significantly in 2022, followed by a further 4% increase in 2023. The rebound in insolvencies in 2021 and 2022 is in contrast to the artificial low recorded in 2020. In annual terms, the trend reversal appears limited (+4% to 16,310 insolvencies in 2021) but conceals a massive bounce back in the last two quarters (+36% y/y in Q3 and +42% y/y in Q4, respectively) that gained even more in Q1 2022 (+96% y/y).

The main reason for the insolvencies point to voluntary liquidation proceedings which are particularly prevalent in the utilities, construction, information/communication and business services. The UK stands out with a high share of fragile firms (17% compared to 12% in France and 6% in Germany) when looking at profitability, capitalisation and interest coverage recorded in 2021 financials.

The UK is expected to outpace its European peers for forecasted business failures, according to Allianz Trade’s research. It expects insolvencies to remain artificially low in Germany, France and Italy owing to ongoing state support as businesses contend with the impacts of the pandemic. Germany is expected to post a 4% increase in 2022, France 15% and Italy 6%.

Big rise in CCJs in Scotland

Tue, 17 May 2022 11:50:06 GMT

52% rise in CCJs

Business CCJs in Scotland saw a fifty two per cent (52%) increase in decrees and judgments against them in the first quarter of 2022, in comparison with the same period last year in 2021.

The total value of these judgments also increased from £2.1m to more than £8m, a rise of 269%.

Registry Trust, the not-for-profit organisation which maintains the Register of Judgments, Orders and Fines for the UK & Ireland, has released its latest monetary judgment statistics.

There were 230,239 new monetary judgments processed overall in UK & Ireland – a 10% decrease year-on-year.

However, while the number of consumer judgments fell, there was a significant rise in county court judgments (CCJs) and Scottish decrees against businesses.

Registry Trust chair Mick McAteer said: “Although there was a welcome fall in the number of decrees registered against Scottish consumers in the first quarter of this year compared to the first quarter of last year, there is no room for complacency, as the full impact of the cost of living crisis is yet to be felt by households.

“The significant increase in the number and value of decrees against Scottish businesses is a cause for concern and reflects the serious challenges they face in the current economic climate.”

Pandemic and Late Payment affecting mental health of small business owners

Wed, 11 May 2022 19:20:27 GMT

Impact of Late Payment on Mental Health

New Federation of Small Business (FSB) research has illustrated Covid's negative impact on the mental health of close to two million entrepreneurs.

In a survey by the Federation of Small Businesses involving 1,000 business owners, 34% of small business owners stated that their mental health had suffered over the duration of the pandemic.

Latest Government figures show that there are 5.5 million small businesses across the UK, indicating that approximately 1,800,000 have suffered a mental wellbeing hit due to COVID.

One in four (24%) report that they currently have a mental health condition such as anxiety, depression or post-traumatic stress. This rises when concerning disabled entrepreneurs where the figure rises to four in ten (43%). One in seven (16%) of small business owners report having a mild mental health condition, with 6% and 2% respectively stating that they have a moderate or severe condition.

The new research flags the extent to which small business owners are struggling to make use of the workplace health support offered by government. Only one in ten (13%) disabled business owners or business owners with a health condition have used the Access to Work Scheme, aimed at providing targeted workplace help for both business owners and employees. More than a third (35%) have not heard of the scheme at all. A quarter (25%) are not aware that sole traders are eligible to access it.

With loneliness the theme of this year’s Mental Health Awareness Week, the new study also highlights the ongoing impact of the UK’s poor payment culture on mental wellbeing. Six in ten (62%) of small business owners state that they were subject to late or non-payment after COVID hit, with a quarter (26%) stating that dealing with poor payment impacted their mental wellbeing during the pandemic.

The cost to the average small employer of having staff away from work due to physical or mental health conditions surpassed £3,500 last year, translating to a £5bn cost to the small business community as a whole.

In light of the findings, FSB is encouraging the Government to:

Improve Access To Work take-up by ensuring health professionals point patients towards the scheme when writing fit notes.
Launch a new, ambitious alternative to the New Enterprise Allowance to help those with mental health conditions who are out of work to create start-ups.
Make Audit Committees directly responsibility for supply chain practice, elevating the importance of prompt payment within corporate environmental, social and governance (ESG) programmes, and place ending the UK’s late payment culture at the heart of BEIS’s forthcoming enterprise strategy.
Develop “Pathways to Entrepreneurship” strategies aimed at dismantling the unique barriers faced by different entrepreneurs, including those with mental health conditions.
Take forward FSB and TUC’s joint proposal for a small business statutory sick pay rebate, to help firms recover the cost of the millions of days lost to sickness absence each year.

Sharp Rise of Companies in Financial Difficulty

Tue, 10 May 2022 20:50:35 GMT

19% rise in Companies in critical financial distress

Insolvency firm Begbies Traynor has reported a 19% rise in Companies in critical financial distress for the first 3 months of 2022, driven mainly by insolvencies in the construction and the hospitality sectors (bars and restaurants).

Research conducted by the Insolvency specialist has found that 1,891 firms were now in severe financial distress for the first quarter of the year, a fifth higher than for the same period of 2021.

Businesses in significant financial distress are down 20% on the level a year ago at 581,596, though this is flat on the previous quarter.

County Court Judgments – a warning sign of future insolvencies are up 157% to 22,552 in the quarter compared with a year ago; with March having seen the highest number in a single month for five year.

The data points to a forthcoming wave of business failures as the economy adjusts to the post-pandemic reality with Covid reliefs cut off and rapid growth in inflation.

The latest Begbies Traynor “Red Flag Alert” research, which has examined the financial health of British companies for the past 15 years, highlights the strain two years of extraordinary financial pressures have had on thousands of UK companies.

Julie Palmer, partner at Begbies Traynor, warned that unless there is action to allow struggling businesses to mitigate the impact of these pressures, they risk being unable to continue to operate.

“The critical distress and CCJ data are likely predictors of a wave of insolvencies coming – it’s just a case of when the dam holding it back finally bursts.

The latest Government insolvency figures for March reinforce this worrying trend with creditors voluntary liquidations – the most common type of corporate insolvency – more than doubling compared to March 2021 and up 62% compared to March 2019

“The Government’s finances are themselves taking a hit from the increasing interest environment; they are simply not able to introduce further significant funding into the system, and they now have a choice to make. Do they rush to recover funds handed out during the pandemic to ensure there was a functioning economy afterwards? Or look for ways to control the number of businesses that fail?

“Having put so much money into protecting businesses over the past two years, ministers won’t want to see it wasted as companies collapse, unable to repay their debts.”

Ms Palmer said one way the Government could ease the pressure on embattled businesses while not writing off debts racked up through measures such as the Coronavirus Business Interruption Loan Scheme (CBILS) would be taking a longer-term view.

Big rise in company insolvencies for March 2022

Mon, 25 Apr 2022 22:36:34 GMT

Company insolvencies more than double

The number of registered company insolvencies in England and Wales hit 2,114 in March 2022 which is more than double the 999 figure seen a year earlier in March 2021.

The figure of 2,114 figure is also 34% higher than the pre-pandemic number of 1,582 seen in March 2019. Of the company insolvencies seen in March 2022, 1,844 were creditors’ voluntary liquidations (CVLs). This is more than double the number in March 2021 and 62% higher than March 2019.

With regards to other types of company insolvencies, such as compulsory liquidations, these remained lower than before the pandemic, although there were almost four times as many compulsory liquidations in March 2022 compared to March 2021, and the number of administrations was 74% higher than a year ago.

For individuals, 633 bankruptcies were registered, which was 39% lower than in March 2021 and 59% lower than March 2019. On average there were 7,136 IVAs registered per month in the three-month period ending March 2022, which is 12% higher than the three-month period ending March 2021, and 14% higher than the three-month period ending March 2019. IVA numbers have ranged from around 6,300 to 7,400 per month over the past year.

Banks amongst slowest payers

Sun, 24 Apr 2022 14:15:54 GMT

Crucial for large business to pay suppliers quicker

TSB has called on its high street bank rivals Co-Operative Bank and Metro Bank to speed up supplier payments after it found the banks are among the worst culprits for paying small firms late.

Co-Op bank pays just half its suppliers within 30 days, while Metro Bank topped the list of overdue invoices at more than one in four, according to TSB’s data.

The figures put both Co-Op and Metro Bank below the voluntary standard ‘prompt payment code’. The prompt payment code requires signatories to pay 95 per cent of invoices to companies with fewer than 50 staff within 30 days, and 95 per cent of all invoices within 60 days.

Late supplier payments by big firms in not just the banking industry, but in all industries including construction, have come under scrutiny during the pandemic as late payments have forced small businesses into financial difficulty.

The government’s Small Business Commissioner Liz Barclay warned earlier this year that the UK was facing the loss of 440,000 small firms this year as a result of poor payment practices, as well as “the talent that could drive future prosperity”.

Said Liz Barclay: “If they don’t get paid quickly, they can’t manage their cashflow and may well not be around the next time you need them. And it can be very expensive in time and money to find a replacement supplier you can trust,” Barclay warned.

TSB’s Director of Customer Banking, Mark Curran called on banks to put “minds to task” to resolve the issues.

“Paying business suppliers on time is critical not only to healthy cash flows and working capital but also reducing the mental burden on owners so they can focus on what matters most to grow their business,” he said.

Many firms expected to raise prices

Tue, 12 Apr 2022 17:53:20 GMT

British businesses to raise prices

The British Chambers of Commerce’s (BCC) latest quarterly survey found almost two-thirds of firms expect to raise prices over the next three months, which is the highest since the survey began in 1989.

This is unwelcome news for consumers who face pressure from multiple fronts with the National Insurance rise, as well as increases in gas, electricity and petrol prices.

BCC conducted a survey of over 5,600 businesses and found that Plant, machinery and equipment investment continued to stagnate. Just over a quarter of firms (27 percent) reported an increase in investment spending, while 58 percent reported no change, and 15 percent a decline.

When asked what pressures are causing price hikes, 92 percent of manufacturers said raw materials, and 56 percent cited energy and transport costs among other overheads.

Labour costs influenced one third of firms’ decision to rise prices, with wage increases and a higher level of employers’ national insurance rates in place.

Almost two thirds of firms (62 percent) expected to lift their prices in the next quarter, up from 58 percent in Q4 2021. Only one percent expected a decrease.

The statistics show that business investment sustained its historically low levels, and domestic sales had stagnated across most sectors.

“This metric remains largely unchanged since the second quarter of 2021,” the BCC said. This is despite a tax break taking effect from April 2021 that gives firms a deduction from their profits of 130% for each £1 of investment spending.

As the costs of imported raw materials and energy surged on international markets, Jonathan Reynolds, shadow business secretary, said the government is: “…ramping up taxes and turning their back on energy intensive industries” during a period of increased inflationary pressure.

Inflation reached a 30-year high of 6.2 percent last month. Following chancellor Rishi Sunak’s spring statement, the Office for Budget Responsibility slashed its estimated GDP growth from six percent to 3.8 percent.

Suren Thiru, head of economics at BCC, said: “High price pressures suggests that the current inflationary surge will escalate significantly in the coming months.

“The reversal of the hospitality VAT cut, the higher energy price cap and soaring energy and commodity prices amid Russia’s invasion of Ukraine, should lift inflation well above eight percent in the near term”.

He warned that many firms lacked the cash reserves to survive further shocks, making them vulnerable to a long war in Ukraine and more persistent price increases.

“The first quarter may be the high point for the UK economy with activity likely to stall in subsequent quarters as surging inflation, rising energy bills and higher taxes increasingly drags on activity”.

Insolvency Service appoints Non-Executive Director

Tue, 12 Apr 2022 17:42:02 GMT

Insolvency Services News

The Insolvency Service has announced that it has appointed Frances Coulson as a new Non-Executive board member.

Coulson is a practicing lawyer and has more than 26 years of experience in insolvency law, and a senior partner, board member and Head of Insolvency & Restructuring for the city-based law firm Wedlake Bell.

Together with the other non-executive board members, Coulson will work closely with the Insolvency Service’s senior leadership team to provide strategic leadership and governance for the agency.

Coulson is a leading figure in the insolvency profession having served in several positions for the insolvency trade body, R3. She was President of R3 between 2011 and 2012 and a member of its council until April 2022.

In addition, Frances is Deputy Chair of the Fraud Advisory Panel – a charity dedicated to anti-fraud work, and a member of the Economic Crime Prevention Group. She is a Special Constable with the National Crime Agency and served as Deputy Chair of the IPA’s Regulatory & Conduct Committee before recently stepping down.

Chair of the Insolvency Service Board, Mark Austen, said:

“I am delighted that Frances has chosen to join our Board. She brings a very experienced practitioner view and will have much to contribute to framing and ensuring a positive impact of the ambitious change agenda planned for the Service over the next few years.”

Incoming board member, Frances Coulson, said:

“I am delighted to have been appointed to the Insolvency Service Board as a non-executive Director. Insolvency is a vital component in even the strongest economy and serves to encourage good corporate behaviour, while ensuring fair competition and fair treatment amongst creditors, the taxpayer and business employees.”

“Insolvency is in the spotlight following recent world events and the Insolvency Service’s role in ensuring economic confidence and a robust system is vital. I look forward to working with the Insolvency Service’s senior leadership and my fellow non-executive Board Members to constructively help the agency deliver its objectives.”

The Insolvency Service’s Chief Executive, Dean Beale, said:

“I am very pleased to welcome Frances to the Insolvency Service Board. As the country continues to recover from the economic impacts of the pandemic the Insolvency Service has a vital role to ensure the insolvency framework and insolvency practitioners are well placed to support businesses and individuals.”

“Frances is an experienced insolvency professional who will be a valuable addition to our board, helping to support the Insolvency Service in achieving its objectives.”

Energy supplier close to administration

Sun, 27 Mar 2022 14:52:35 GMT

Special Administration for Gazprom's UK subsidiary

According to media reports, Gazprom Marketing and Trading Retail Ltd - whose parent company is majority-owned by the Russian state - had been trying to find a buyer in the wake of the corporate backlash against Russian companies. This included sanctions that have targeted its parent firm.

According to Bloomberg, the company is a prime candidate to be taken into the U.K.’s special administration regime if it fails, to ensure continuity of supply, according to a person familiar with the matter. Officials are closely monitoring the situation at the company, which has more than 30,000 business customers.

Gazprom could become the second business in the energy market to enter into special administration, after Bulb entered into this process in November.

According to Bloomberg, once confirmation of both regulatory and legal approval is received, Teneo is being lined up to oversee the running of the company.

In an emailed statement to Bloomberg last night (21 March), Gazprom’s wholesale trading unit said: “ We are in constant contact with our regulator Ofgem and no decision has been taken to appoint a special administrator or supplier of last resort (SOLR) that we know about.

It added it was “e ntirely normal ” for Ofgem to “ consider all possible scenarios and formulate plans to respond to whatever events unfold .”

Company Insolvencies more than double year-on-year

Sun, 20 Mar 2022 21:10:43 GMT

Company insolvencies more than double for month of February 2022

The latest insolvency statistics published by The Insolvency Service for the month of February 2022 show that number of registered company insolvencies in England and Wales was more than double the number registered in the same month last year (685 in February 2021; 1,515 in February 2022), and 13% higher than the number registered two previously (1,346 in February 2020).

The number of other types of company insolvencies - such as compulsory liquidations - remained lower than before the pandemic. However there were more than twice as many compulsory liquidations and almost double the number of administrations in February 2022 when compared to February 2021.

With regards to individuals, there were 588 bankruptcies registered - which was 36% lower than February 2021 and 62% lower than February 2020. As for Debt Relief Orders (DROs), 2,242 took place in February 2022.

There was an average of 6,384 individual voluntary arrangements (IVAs) registered per month in the three-month period ending in February 2022. This is 4% higher than for the three month period ending in February 2021 and 15% more than the three months ending in February 2020.

Company Director gets 9 year ban for Covid loan lies

Sun, 13 Mar 2022 15:05:52 GMT

£50k loan for company with £2k turnover

A company director who secured a £50k coronavirus loan for his Wolverhampton-based business under the Bounce Back Loan Scheme has been disqualified from being a Limited Company director for nine years.

Inderjit Singh Dadial was the sole director of Cali Juices Ltd. The company’s accounts ending January 2020 showed a turnover of just over £2,000, but the Insolvency Service investigation found that Inderjit Singh Dadial had lied and stated the turnover as £250,000.

Moreover, the company was not in fact eligible for any money under the scheme based on its actual accounts, and income received into the company’s bank account.

The Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from Inderjit Singh Dadial after he admitted grossly inflating the company’s turnover to secure the Bounce Back Loan. His ban runs from 21 March 2022 and lasts for 9 years.

It comes two months after the Treasury confirmed that it wrote off £4.3 billion worth of the £5.8bn of fraud witnessed across its Covid business loan schemes.

Former Treasury minister Lord Agnew resigned from his role in January in anger over the handling of fraudulent coronavirus loans and has since slammed the Treasury’s anti-fraud efforts as a ‘Dad’s Army’ operation.

Dave Elliott, chief investigator at The Insolvency Service, said the Dadial case was proof it was tracking down fraudsters.

He said: "The Insolvency Service will not hesitate to investigate and use its powers against those who have abused the Covid-19 support schemes.”

Increasing numbers of IVAs fail

Wed, 09 Mar 2022 22:07:13 GMT

Over 30% of IVAs since 2016 fail

The latest official government reported statistics show that increasing numbers of IVAs do not complete. They fail, leaving the borrower back with their debts.

32% of IVAs started in 2016 have failed, and some of these IVAs from 2016 are still in progress, so the final failure rate will be over a third.

Emergency provisions during the pandemic enabled people to have longer repayment holidays, and consequently termination rates fell – bringing distorted statistics. Therefore, it will be longer before these IVAs complete. Until then, more are set to be failing as emergency breaks have ended, and with inflation increasing, this in turn brings a cost-of-living crisis.

“Historically, lifetime termination rates have typically been approximately 5-6 percentage points higher than the rate after four years,” the report said.

SMEs set to increase staff numbers as confidence grows

Fri, 18 Feb 2022 10:49:12 GMT

Growth in Business Confidence

Data released from Barclaycard Payments SME Barometer show that:

· 40% of UK SMEs plan to make an average of six hires in the first quarter 2022

· 2022 has started well, with SMEs expecting Q1 earnings to grow by an average of 13.5 per cent year-on-year

· However, two thirds are concerned about the impact the rising cost of living, inflation and energy bills will have on their business

The news comes as 56.2 per cent of SMEs report a rise in earnings in Q4 of 2021 against the same period in 2020. Data from Barclaycard Payments, which processes £1 in every £3 spent in the UK and services over 350,000 SMEs, supports this trend – with transaction volumes up 42.3 per cent for in the last three months of 2021, compared to the same period in 2020.

Though economic uncertainties persist, almost three fifths (58.1 per cent) of SMEs are predicting an increase in revenue this quarter compared to the same period last year when the UK was in the third COVID-19 lockdown.

On average, businesses forecast a year-on-year increase in Q1 turnover by 13.5 per cent. Perhaps unsurprisingly, hospitality and leisure operators – whose physical premises were closed this time last year – expect the largest turnover increase (33.6 per cent), followed by retail (16.5 per cent), transport and distribution (14.6 per cent) and financial services firms (11.2 per cent).

Year-on-year payment volumes also demonstrate a feeling of confidence amongst SMEs across the UK, with leisure and entertainment, food and drink and retail SMEs seeing an increase by 471.0 per cent, 110.8 per cent and 54.1 per cent respectively.

Construction Industry Insolvency Concerns

Fri, 11 Feb 2022 11:59:59 GMT

Construction Woes

The continued increase in the costs for labour and materials is adding weight to the rise of insolvencies within the construction industry. Furthermore, contractors being stuck to fixed-price contracts and the end of Covid support is all contributing to the number of insolvencies.

Data from the Insolvency Service said the amount of firms in the industry failing had risen 25% between October and November last year, with 325 businesses going bust during the period. This figure accounted for 19% of the 1,678 firms which collapsed across all industries in the four-week period.

NMCN, formerly known as North Midland Construction, called in the administrators during October 2021, and was one of the more high-profile casualties. The company ceased trading after 75 years in business, and had grown rapidly in recent years, recording turnover of £217.6m in 2015, to £404.7m in 2019, the last year for which accounts are available. However, its margin stagnated over the period, averaging 1.5 per cent.

The insolvency figures in the construction industry have prompted concerns that numbers will increase during 2022 as firms struggle to cope with rising costs, and having been lumbered with contracts agreed at fixed prices several years ago.

John Bell, senior partner at Clarke Bell Insolvency Practitioners in Manchester, said: “The sector is being hit by numerous issues including rising raw material prices, supply chain disruptions, historic debts built up during the pandemic, labour shortages and being tied to fixed-price contracts while the rate of inflation is rising.

“It is the combination of these difficult factors that is leading to so many construction companies going insolvent and being liquidated.”

In its latest report on profit warnings, accountant EY Parthenon said the number of firms across all industries being forced to issue profit warnings had gone up to 70 in the final quarter of last year – a rise of 19% on the same period in 2020.

FCA Crackdown on firms who seek to limit their liabilities

Thu, 03 Feb 2022 20:04:53 GMT

New Guidance Published by the FCA

The FCA has noted an increase in firms developing proposals, such as Scheme of Arrangements, to deal with significant liabilities to consumers, in particular redress liabilities.

The guidance published by the FCA (on 25 January 2022) has made it clear to firms seeking to limit their liabilities that they should provide the best possible outcome for customers, which will include providing the maximum amount of funding possible to meet compensation claims by customers. Failure to do so may result in the FCA objecting to the firm’s proposals in court. The FCA will also use its regulatory powers, including enforcement actions for misconduct by firms or their senior managers, when appropriate.

Going forward, firms should inform the regulator as soon as they are considering a scheme of arrangement or other compromise to manage liability and the FCA will review each proposal on a case-by-case basis to ensure firms are meeting their regulatory obligations.

Sarah Pritchard, Executive Director of Markets at the FCA, said:

'Under existing company and insolvency law, firms have options to limit their liabilities. When making use of these, they still have a responsibility to treat their customers fairly. We will take action against firms that don’t meet this obligation. The guidance we are consulting on should help firms understand our expectations and ultimately help firms to avoid proposing compromises that are unacceptable to us because they fail to provide the best possible outcome for consumers.'

Derby County in Record Debt

Tue, 01 Feb 2022 21:08:10 GMT

Derby County Football Club in Huge Debt

English football club, Derby County, formed in 1884 and one of the 12 founding members of the football league, are in serious financial difficulty and in danger of having their results this season expunged, and being kicked out of the Football League having accumulated one of the biggest debts outside of the Premier League.

The debts totalling £60 million are made up of £30 million owed to HMRC, £20 million that is owed to MSD (a United States investment firm who have supplied loans for the stadium owned by former owner Mel Morris), and another £10 million owed to other creditors.

The club have been given a four-week stay of execution after the English Football League agreed to extend the deadline for the club's administrators to show there are sufficient funds to complete the current season.

Loss of revenue during the coronavirus pandemic has hit the club; however, a hold on debt collection action to wind up the football club by HMRC has benefitted the club to some degree, but it has allowed the football club’s debts to spiral even further.

Negotiations are ongoing with HMRC as Derby’s administrators attempt to reduce the tax burden and make the club more attractive to would-be buyers. Similar discussions are ongoing with MSD as well as the club’s other creditors.

Insolvency Reguations to be Modernised

Thu, 30 Dec 2021 16:41:34 GMT

New proposals to simplify insolvency regulation

The UK Government has set out new proposals to strengthen, reform and simplify regulation of the insolvency sector. The current regulatory regime has been in place for over 30 years and requires reforming to keep pace with developments in the insolvency industry.

The new consultation is inviting views on creating a single regulator for Insolvency Practitioners and extending regulation to firms that offer insolvency services. The consultation will run until 25th March 2022.

As the Under-Secretary of State, Lord Callanan says:

“The current framework dates to 1986 and has not kept pace with developments in the insolvency market. The regulatory structure is based on the individual responsibility of Insolvency Practitioners and does not consider the firms they work for. It is top-heavy for the limited size of the profession, with four recognised professional bodies responsible for regulating a profession of fewer than 1600 people, as well as the Insolvency Service, acting on behalf of the Secretary of State, as oversight regulator. Despite close collaboration between regulators and the Insolvency Service, the current model has not achieved the levels of consistency, independence and transparency which were envisioned following the introduction of statutory objectives for regulators in the Small Business, Enterprise and Employment Act 2015.”

Key changes set out in the consultation include:

establishing a single independent regulator to sit within the Insolvency Service, replacing the current four Recognised Professional Bodies
extending regulation to firms that offer insolvency services, as the current regime only covers individual Insolvency Practitioners
create a public register of all individuals and firms that offer insolvency services
create a system of compensation and redress

The government believes that the existing four membership bodies has led to weaknesses in the regulatory system. As well as a lack of regulation of firms undertaking insolvency work, the current system also lacks transparency and has inconsistencies, with different bodies making information available in different formats.

The Government is also proposing a public register that will clearly show all individuals and firms that are authorised to provide insolvency services, as well as noting any sanctions against individuals or firms from the regulator.

Furthermore, where there has been a mistake or wrongdoing by an Insolvency Practitioner or firm offering insolvency services, which has adversely affected one or more parties involved in the proceedings, there will be a new formal mechanism that will allow for compensation to be paid if appropriate.

Companies House admit delays

Wed, 15 Dec 2021 22:00:33 GMT

Delays to appeals at Companies House

According to accountants, Blick Rothenburg, businesses are being pursued by debt recovery agents for late filing penalties as Companies House take up to six months to respond to appeals.

With so many penalty appeals at Companies House during the pandemic, the outcome for businesses is prolonged delay and uncertainty.

Many of these appeals are from businesses that missed the late filing deadline for their financial statement because of health issues or being trapped overseas during the pandemic.

Blick Rothenberg claims some businesses are waiting as long as six months for the registrar of companies to respond and when they do get a response, appeals have been “generically rejected without regard to the difficulties faced by the business”.

“When this is challenged, it is passed to another department for further review adding to the prolonged delay and uncertainty,” said Marc Levy, a partner at Blick Rothenberg.

Levy added that some penalties have been passed on by Companies House to debt collection agents before the appeal has concluded.

“This is the last thing that such business owners need, when they are under financial strain, still waiting to hear the outcome from Companies House and just fighting to survive."

They added: “All appeals are individually considered and, if the appeal is unsuccessful, the appellant has the option to ask our Senior Casework Unit to review the decision and following that ask for an independent adjudicator to review the case.”

In the meantime, the Companies House spokesperson encouraged companies to lodge appeals in good time.

“Once we’ve received an appeal, recovery action is put on hold until the matter is dealt with. Occasionally, we do receive appeals after recovery action has started and, as soon as we are aware an appeal has been made, we will suspend recovery action until the outcome of the appeal is known.”

US creditors can now contact debtors via social media

Wed, 08 Dec 2021 19:07:25 GMT

Debt recovery Agencies to DM Debtors

Debt Recovery Agencies in the United States are now able to use Social Media to assist in collecting debts. They will be able to contact debtors via direct messages (DM) on social media on platforms such as Twitter and Facebook.

The rules from the Consumer Financial Protection Bureau (CFPB) – approved under the Donald Trump administration in 2020 - opens the door for creditors to use DMs to contact millions of Americans who have loans.

These rules will see US debt recovery agencies contacting debtors via social media networks. The agencies must initially inform the debtor that they are from an American debt collection agency.

Consumers can opt out of these messages, but creditors do not need permission to contact people. There are no rules for how many messages they are allowed to send.

The latest updates have been made to the Fair Debt Collection Act which is over forty years old. Lenders had long argued that these changes were needed, given that the Fair Debt Collection Practices Act, which regulates the industry, became law in 1977 - long before the advent of social media and mobile phone texts.

The rule also creates a new limit for phone calls. Seven calls can be made each week for any particular debt, but people with multiple debts may still be called multiple times each week.

Critics warn that the changes puts borrowers at risk, such as missing key information about their debts or falling victim to illegal online scams

UK Government asks for advice on its tax debt collection

Thu, 02 Dec 2021 20:58:38 GMT

Request for debt collection advice

HMRC has made a public announcement asking for advice on modernising and improving its tax debt collection from UK businesses. The consultation is described as:

“The government is considering how HMRC can modernise its collection of tax debts to reflect the changing nature of the economy and new business practices. The call for evidence also seeks views on HMRC’s approach to the small minority of business taxpayers who do not engage with HMRC and hold off paying their tax for as long as they can, forcing HMRC to resort to enforcement action.”

The statement, published on 30 November 2021, asks for suggestions on improving its current methods of tax debt collection, but will not affect those companies that are in temporary financial difficulty and need support from HMRC, “… to get back on a temporary financial footing”. The consultation closes on 22 February 2022.

After a turbulent time for UK businesses due to the coronavirus pandemic, this consultation from HMRC may be seen as an opportunity to better support businesses, many of whom are struggling with unpaid invoices.

UK taxpayers face losses on covid loans

Mon, 29 Nov 2021 22:52:00 GMT

Losses in the billions - but may be less than expected

UK taxpayers are facing a loss of about £5 billion from fraudsters who have abused the minimal checks on the government’s Covid-19 bounce back emergency loan scheme.

The bounce back loan scheme, rushed out by the government last year to try to support hundreds of thousands of smaller businesses at risk of collapse due to coronavirus restrictions, permitted banks to offer government-guaranteed loans of up to £50,000. This left the UK taxpayer to pick up the tab for any unpaid loans.

In total, £46.3 billion has now been lent to over 1.1 million businesses through either the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS), or the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

Expected losses are still lower than initially expected, and last year’s official estimates indicate that government lending plans for businesses during the coronavirus crisis could cost taxpayers £ 18-26 billion.

HMRC relocating staff to new site

Thu, 25 Nov 2021 21:24:29 GMT

New city centre site in Newcastle

HMRC are relocating up to 9,000 staff to a new site in Newcastle upon Tyne, in a city centre complex.

The new complex is based at Pilgrim's Quarter in Newcastle and it will be the largest of HMRC's 13 regional centres. The department is relocating staff from Benton Park View in Newcastle and Waterview Park in Washington. A 25 year lease has been agreed at Pilgrim's Quarter.

The new site will provide larger office space and better access to public transport.

HMRC's chief executive Jim Harra said: "Pilgrim's Quarter will deliver the inclusive, flexible and collaborative working environment that meets the current and future needs of our colleagues while improving career development opportunities."

Newcastle City Council leader Nick Forbes hailed the move and said it would provide a boost to local businesses.

"This is fantastic news for Newcastle and anyone who has a stake in the success of the city centre," he said.

Late Payments threatening businesses

Mon, 22 Nov 2021 20:10:28 GMT

Only 1 in three businesses are paid within terms

Research from leading alternative finance provider, Time Finance, has revealed that late payments are threatening the survival of UK SMEs.

For 70% of SMEs, late payments are a continuing issue leading to more severe consequences with over 40% worrying about their own cashflow as a result. Recent figures from the Federation of Small Businesses estimate that 50,000 businesses close each year due to late payments.

Time Finance found that only one in three businesses are paid by their customers within agreed terms, with 70% waiting more than 60, 90 or 120 days. As a result, a quarter of businesses struggle to pay HMRC.

42% of SMEs believe that late payments from customers was one of the greatest challenges and threats hampering business success, and one in ten are concerned for anticipated insolvency as a result.

Almost one in three businesses also fear their relationships with customers are negatively affected due to chasing payments, whilst over one third struggle to pay their own invoices or their own employees on time.

Insolvency Statistics for October 2021

Tue, 16 Nov 2021 21:17:33 GMT

1,405 company insolvencies in England and Wales

The Insolvency Service will continue to release monthly company and individual insolvency statistics for England and Wales and Northern Ireland, as well as monthly company statistics for Scotland, throughout the remainder of the coronavirus pandemic, and for a period thereafter.

Caution is noted as these statistics are considered ‘experimental’ since the process of compiling insolvency data in a monthly format is new to the statistics team, and is subject to review. Furthermore, it is not possible to determine whether an insolvency is directly related to the coronavirus pandemic, and consequently it is not possible to state its direct effect on insolvency volumes.

In October 2021 the number of registered company insolvencies were similar to pre-pandemic levels. There was a total of 1,405 company insolvencies in England and Wales, which included:

1,248 creditors’ voluntary liquidations (CVLs)
46 compulsory liquidations
95 administrations
16 company voluntary arrangements (CVAs)
0 receiverships

Overall company insolvencies in October 2021 were 5 per cent lower when compared to October 2019 (pre-pandemic) but 63 per cent higher when compared to October 2020.

With regards to individual voluntary arrangements (IVAs), the numbers are as follows:

In October 2021, there were:

7,031 IVAs registered (using a three-month rolling average)
1,937 debt relief orders (DROs)
601 bankruptcies (518 debtor applications and 83 creditor petitions)

Debt Respite Scheme:

Between May (when the scheme was launched) and October 2021 there were 32,082 breathing space registrations. These were made up of:

31,651standard breathing space registrations

421 mental health breathing space registrations (for those receiving mental health crisis treatment)

In October 2021 there were 4,836 breathing space registrations. This included 4,755 (98.3%) standard breathing space registrations and 81 (1.7%) mental health breathing space registrations.

Over £5.5bn of Covid support funds lost to fraud or error

Sun, 07 Nov 2021 16:24:56 GMT

HMRC seen to recover funds

HM Revenue and Customs have acknowledged that more than £5.5bn of UK Government coronavirus support schemes including furlough, self-employed support and “eat out to help out”, was paid out to fraudsters or paid out in error.

This sum represents almost 9% of the £60bn paid out under the furlough scheme in the 2020-21 tax year which ended up in the hands of organised crime gangs, fraudsters or was awarded erroneously.

The furlough scheme was paid out to 11.5 million workers up to an amount of £2,500 since March 2020. £490m was lost to fraudulent or incorrect claims under the Self-Employment Income Support Scheme, and £70m for the “eat out to help out” scheme set up to support restaurants last summer.

An HMRC spokesperson said the schemes were created quickly to support people in dire need, and had been subsequently strengthened to crack down on fraud.

“The Covid support schemes have helped millions of people and businesses through the pandemic, and the government was clear that the priority was getting money to those who need it as fast as possible,” the spokesperson said.

“The Taxpayer Protection Taskforce is expected to recover £1bn from fraudulent or incorrect payments over the next two years, and work is already under way, with 23,000 ongoing investigations.”

HMRC said it had so far stopped or recovered £840m of over-claimed grants in 2020/21.

Its annual report highlighted an unnamed company where “staff had been threatened with the sack if they didn’t continue working despite being furloughed, even if sick”. Tax investigators recovered £357,000 from the firm.

In another instance, a restaurant with “one eligible employee – the director” claimed the maximum £2,500 a month for several “off-the-book employees”. At the same time the restaurant claimed to be closed it signed up for support under the “eat out to help out” scheme.

UK businesses hold 52% of toxic debt

0010547430 (J MATTHEWS) — Fri, 29 Oct 2021 11:05:46 GMT

Toxic Debt Increase

New data from Begbies Traynor Group has found that corporate debt has increased by £1.9tn in 2020 to £6.6tn and 52% of UK businesses are saddled with “toxic debt” that may never be repaid.

Tax returns filed for 2020 by these companies show they would struggle to pay their bills within the following 12 months (liquidity ratio of less than 1). The corporate debt growth in 2020 is considerably higher than the £306bn revealed in 2019 tax returns. Due to the amount of toxic debt, Begbies Traynor predicts the amount of zombie companies (that is, companies that service their debt but not pay the principal sum) to be on the increase, with a real risk that more debts will be called in via the courts.

The data also illustrated that there are some business sectors more at risk than others, with 67% of businesses in Real Estate and Property, 66% Hotels and Accommodation and (65%) Bars and Restaurants are now unlikely to be able to pay their current liabilities.

Brendan Clarkson, Director of National Creditor Services at Begbies Traynor, said:

“Toxic debt is being washed around UK business and there is a real danger that the loans from government to help businesses through this time will never be repaid. As a result, there is likely to be a scramble from September, for creditors to seek payments from lendees. After all the longer they do not have payment, the longer they themselves are at risk of transforming into ‘zombie’ businesses racked with debt and trying to gather income to service that debt.

“The zombie companies that owe money to these creditors have been an issue since the recession more than a decade ago, taking advantage of cheap debt available from a number of new lenders to the market. In the last 20 months or so there have been around 30 new lenders enter the market, eager to help, but while debt keeps growing, government reprieves on payment have continued to hurt.

“We are now at a stage where many companies will not be able to pay their debts for the next 12 months. It’s a harrowing position, but it is one that we have to prepare for and find the best outcome of. We can’t simply have a cliff-edge of insolvencies from September. We need to stagger the damage so that the economy and the courts can handle the high levels of pressure.”

Consultation on Buy Now Pay Later

Sun, 24 Oct 2021 19:18:09 GMT

Buy Now, Pay Later Regulation

Tighter regulation of the buy now, pay later (BNPL) industry may be on its way as the treasury launches a consultation on the industry, though some campaigners fear the consultation will not go far enough as the government has concluded there is “relatively limited evidence” of widespread consumer harm.

BNPL allows customers to stagger payments for products such as clothes, footwear, beauty items and furniture with no interest or charges unless they fail to pay back on time, at which point some firms impose late fees. Citizens Advice said BNPL borrowing “can be like quicksand – easy to slip into and very difficult to get out of”.

The consultation (which closes in January 2022) is seeking views to inform the scope and nature of the regulation, but the document suggests that some existing regulations can be applied to BNPL. Some see BNPL as the future of credit finance (the use of BNPL nearly quadrupled in 2020, to £2.7bn of transactions), while others see it as a potential Wonga-style scandal.

Treasury proposals include introducing rules governing how BNPL firms treat customers in financial difficulty. Also, proportionate regulation should include the ability for consumers unhappy about the way a BNPL firm has treated them to complain to the Financial Ombudsman Service.

It could be late 2022 or 2023 before regulation takes effect. The Treasury consultation, which runs until 6 January, will be followed by an FCA consultation.

Business Insolvencies rise in September

Wed, 20 Oct 2021 20:50:03 GMT

Business insolvencies continue to rise

The latest number of businesses that failed was the largest since the beginning of the pandemic, according to data released by the Insolvency Service.

A total of 1,446 company insolvencies were registered during September, an increase from 1,349 recorded in August and 56% higher than the same month last year.

Nicky Fisher, Deputy Vice President of insolvency and restructuring trade body R3, said “The insolvency statistics published today show the economic effects of the pandemic are continuing to take a toll on businesses and consumers.”

“The dramatic increase in corporate insolvencies compared to this time last year – to the highest level since January 2020 – illustrates just how crucial the Government’s support has been in keeping businesses afloat and suggests that there may be a rocky road ahead for the business community now it has ended.”

September saw many firms contend with rising energy and labour costs and the easing of Covid government support. Already a number of Energy firms have failed as companies struggle with the price of wholesale gas prices.

There is concern that the rising energy costs will affect other industries. Claire Burden, a partner at professional services firm Tilney Smith & Williamson, said the ongoing energy price rises will "reverberate into additional sectors" and push more companies such as those in manufacturing and consumer goods into financial strife.

"This will cause further failures when combined with existing pressures of increased transport costs and supply issues," Ms Burden added.

The Bank of England recently stated that one third of small businesses in the UK are classed as "highly indebted", where their debt levels are more than 10 times their cash balances.

Winding-Up Petition Threshold Increases to £10k

Wed, 13 Oct 2021 19:23:04 GMT

Creditors' restrictions are eased, but protection for businesses remain.

Despite the huge disruption to businesses during the Covid pandemic and the resulting lockdowns, the amount of insolvencies to UK businesses has been remarkably low, though recent figures have shown this to be increasing.

The reason why business insolvencies have been kept low during the pandemic is largely due to the Government’s support packages and restrictions on creditors’ actions. This includes the temporary restrictions on winding-up petitions found in schedule 10 of the Corporate Insolvency and Governance Act 2020 (CIGA). From October 2021 the UK Government will phase out these temporary restrictions.

However, the restrictions will not entirely disappear as the Government will continue to protect viable businesses with new temporary restrictions under new legislation by way of the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations 2021 (the "CIGA Schedule 10 Regulations").

What are the new rules?

Businesses will once again be able to issue a winding-up petition on the basis that a company has failed to satisfy a statutory demand. Furthermore, with restrictions on winding-up petitions beings eased, a business will no longer need to consider the financial impact of Covid 19 on the debtor.

Instead, from October 2021 until March 2022, in order to present a petition a creditor will need to satisfy the following four conditions:

Condition A: the debt owed; (i) is for a liquidated amount; (ii) has fallen due for payment; and (iii) is not rent or any other payments (e.g. service charges) that are due under a relevant business tenancy;
Condition B: the petitioning creditor has delivered a written notice to the company containing, among other things, a statement: (i) that the creditor is seeking the company’s proposal for the payment of the debt; and (ii) that if no satisfactory proposal is made within 21 days of the date of delivery of the notice then the creditor intends to petition for the company’s winding-up (a Condition B Notice);
Condition C: 21 days have passed since Condition B Notice was delivered and the company has not made a satisfactory proposal for the payment of the debt; and
Condition D: the debt owed to the petitioning creditor (or a group of petitioning creditors provided they have all met Conditions A to C) is at least £10,000.

Once of the most significant changes will be with regards to Condition D where small businesses will continue to have some added protection to a winding-up petition as the threshold for a statutory demand will increase from £750 to £10,000. Therefore, a minimum of £10,000 will need to be owed in all circumstances before a creditor or group of creditors can present a winding-up petition.

GPs urged to prescribe debt help

Tue, 28 Sep 2021 18:51:08 GMT

Tackling post-Covid inequalities

The UK government is being urged to help fight post-Covid inequalities and promote wellbeing by helping GPs prescribe debt advice and job support for patients struggling with their finances.

The UK’s leading think-tank, The Social Market Foundation (SMF), says financial prescribing, which enables the NHS to refer patients to non-clinical agencies like debt charities and jobs boards, could be a lifeline for those who have lost income during the pandemic and ease the workload of overstretched doctors.

Patients can already be referred to organisations that can help them get fit, connect with others, or find mood-boosting hobbies. NHS England aims to refer 900,000 people this way by 2023, with 1,000 “link workers” already in place.

However, financial prescribing is rare with one survey claiming that as little as 2 per cent of people discuss their money issues with their doctor.

The SMF was commissioned to investigate the UK’s widening financial gap, of which the research can support the creation of innovative financial tools in the wake of Covid.

Scott Corfe, research director at SMF, said: “The state now must turn its attention to supporting a recovery which prioritises employment and financial support for those hardest hit by the pandemic.

“The evidence is clear: rapid and personalised support is the best way to help people back into work and bolster financial resilience.”

Insolvencies expected over the coming years

0010547430 (J MATTHEWS) — Sun, 26 Sep 2021 13:52:27 GMT

Forecast is for an increase in insolvencies of SMEs

As UK government Covid support ends for businesses, up to 15% of UK SMEs are rated ‘fragile’ and risk insolvency during the next four years, according to research by Euler Hermes.

State support helped protect many SMEs in the UK and around the EU from going out of business. However, the UK’s share of fragile SMEs is higher than its nearest European competitors, with Germany and France standing at 7% and 13% respectively.

In 2019 the share of SMEs at risk was 17% and Euler Hermes estimates the figure would stand at 26% today if government support hadn’t been implemented.

The research from Euler Hermes is aimed at detecting insolvency and corporate distress in small businesses four years prior to bankruptcy, and is based on three main indicators: profitability, capitalisation and interest coverage. It applied the criteria to 525,000 SMEs across Europe to develop its forecasts.

Automotive manufacturers and suppliers rank among are among the most exposed, with around 36% within the sector exposed to the risk of insolvency. Euler Hermes also found that a quarter (25%) of those in the energy sector and almost one in five (19%) of construction firms will be vulnerable in the coming years.

Ana Boata, Head of Macroeconomic and Sector Research, Euler Hermes, said “The story that emerges from our analysis is two-fold: While on the one hand government support has provided an incredibly effective safety net for swathes of the economy, the threat of insolvency remains all-too-real for many SMEs over the coming years.’

“For now, businesses will need to deal with the economic headwinds that threaten to slow the global recovery while at the same time planning effectively for long-term growth. Supply chain disruption leaves many open to supply shortages and inflation which will limit growth, but we also expect SME payment terms and the length of time it takes to get paid for orders to rise as public support comes to an end.’

“But there is some good news: while SMEs are more indebted after the Covid-19 crisis, public support helped improve their interest coverage ratios. Low interest rates on new loans also played a significant role, as did resilient profitability and significant efforts to keep cost pressures in check.”

Insolvencies Rise to Pre-Pandemic Levels

0010547430 (J MATTHEWS) — Mon, 20 Sep 2021 21:15:55 GMT

Insolvencies Rise during August 2021

The latest figures from the Insolvency Service show company insolvencies reached their highest level since the first UK lockdown, with businesses balancing the easing of restrictions with the end of government support. There was a total of 1,348 registered company insolvencies last month, compared to 1,097 in July. This marks a 71% increase on the figures recorded in August 2020.

The report shows there were 1,256 Creditors’ Voluntary Liquidations among the insolvencies, with just 35 compulsory liquidations. 1,714 debt relief orders were also recorded for individuals during August, which was 29% higher than during August 2020. Furthermore, 614 bankruptcies were registered – 22% lower than August 2020 and 54% lower than August 2019.

For Bob Pinder, Director at the Institute of Chartered Accountants in England and Wales, he believes it is too early to be called a trend:

“It’s a fine balance at the moment for businesses,” said Pinder. “In some ways, it’s a tougher climate than August 2020 because of the winding down of government support, and there will be some businesses that have struggled through 18 months exiting now due to factors such as rising costs or staff shortages.

“However, it’s the first set of numbers that shows a distinct rise in insolvencies, so it’s too early to draw many conclusions at the moment. Our advice for business or individuals is always to take advice early from a qualified individual – that way you’ll have more options,” concluded Pinder.

Consumer Spending Grows in August

0010547430 (J MATTHEWS) — Mon, 13 Sep 2021 19:32:00 GMT

UK Consumer Spending Growth in August

Consumer spending in the UK grew in all sectors other than international travel during August, when compared to consumer spending back in August 2019, according to Barclaycard.

Spending on essential items grew 14.5% while spending at supermarkets and other food and drink stores also increased by 15.2 % and 76.9% respectively. The purchase of non-essential items also increased by 15.9% - the highest increase since the first lockdown. The consumer spending surpassed July’s figure of 10.4% as UK consumers spend more on UK-based holidays and socialising.

Restaurant spending broke into positive growth for the first time since the start of the pandemic, going up by 0.1%, while spending in pubs, bars and clubs reached 43.4% - the highest growth recorded for over 17 months. The warm weather and continued relaxing of Covid rules had positive impact on entertainment – theatre, festival and theme park tickets – which reached a new high of 24.2%. Taxi and fuel spending also increased, going up by 20.6% and 7.2% respectively.

With kids going back to schools, clothing sales rose for the fourth consecutive month, reaching 33.5% online growth, and 12.8% overall. There was also a 4.4% growth in department store sales.

Overall, confidence in the UK economy rose to its highest point - 37% since February 2020 - 42% - with 78% of Brits confident in their ability to live within their means each month, and 71% feeling optimistic about their household finances.

There is concern about rising prices with 64% of consumers worried about prices increasing, with 42% making changes to their lifestyle to compensate.

Commenting on the news, Barclaycard’s head of consumer products Raheel Ahmed said: “Socialising, shopping, and staycations were top of the agenda for Brits in August, as families and friends made the most of the school holidays, giving a welcome boost to hospitality and leisure businesses.

“Over the coming months, these sectors should also benefit from Brits returning to the office, as colleagues enjoy long overdue catch-ups over post-work meals and drinks.”

Credit Shortage preventing "levelling up"

0010547430 (J MATTHEWS) — Thu, 09 Sep 2021 19:39:21 GMT

Lack of trust between banks and businesses

A shortage of lending to Britain’s small businesses is preventing the UK from “levelling up”, according to a report published by a group of cross-party MPs today.

The All-Party Parliamentary Group in its report, “Scale up to Level Up”, has warned that a lack of trust between banks and businesses has restricted the supply of credit to SMEs in the UK, creating a multi-billion pound funding gap.

The lack of finance restricts business growth and is hampering the government’s ambition to “level up” and address regional inequalities and opportunity.

Danny Kruger MP said: “We need lenders whose interests align with those of the community as a whole…[community development finance institutions] are more flexible, don’t have blanket lending policies and can apply real human judgement to the decisions they make about lending.”

Theodora Hadjimichael, chief executive of Responsible Finance, said: “Access to finance remains the major block to SME growth in the regions, deprived areas and among demographics under-served by mainstream and so-called challenger banks. And levelling-up will not be delivered solely by building projects in red-wall constituencies.”

Contactless Payments to Increase to £100

0010547430 (J MATTHEWS) — Tue, 31 Aug 2021 13:12:22 GMT

Contactless payments increase from £45 to £100

The trade association UK Finance has announced that the contactless card payment limit will increase from £45 to £100 from 15 October 2021, following the decision made by HM Treasury and the Financial Conduct Authority. The limit was previously increased successfully from £30 to £45 back in April 2020.

It will take some time for retailers to update their payment terminals across the UK to accept the new limit.

Commenting on the news, UK Finance chief executive David Postings said: “Contactless payment has proved very popular with consumers and an increasing number of transactions are being made using contactless technology.

“The increase in the limit to £100 will allow people to pay for higher value transactions like their weekly shop or filling up their car with fuel. The payments industry has worked hard to put in place the infrastructure to enable retailers to update their payments systems so they can start to offer their customers this new higher limit."

UK chancellor Rishi Sunak added: “Increasing the contactless limit will make it easier than ever to pay safely and securely - whether that’s at the local shops, or your favourite pub and restaurant. As people get back to the high street, millions of payments will be made simpler, providing a welcome boost for retailers and shoppers."

Insolvencies up during July 2021

0010547430 (J MATTHEWS) — Thu, 19 Aug 2021 11:54:52 GMT

Insolvencies up 13%

In England and Wales there were 1,094 registered insolvencies in July 2021, which was 13% higher than during July 2020, but 24% lower pre-pandemic (July 2019). The overall reduction was mainly due to a lower number of compulsory liquidations.

There were 1,007 creditors’ voluntary liquidations in July 2021 - which was similar to pre-pandemic levels. As for individuals, there were 620 bankruptcies registered - 34% lower than July 2020 and 58% lower than July 2019.

The number of debt relief orders (DROs) handed out in July 2021 were, however, at their highest level since the start of the pandemic - with 1,864 DROs registered. This followed on from the changes in the eligibility criteria on 29 June, including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000.

Commenting on the news, insolvency trade body R3’s president Colin Haig said: “Although government support has continued to provide a lifeline for many businesses which would have otherwise struggled in an economic climate like this, this July was still a challenging month.

“With the opening up of the economy, consumer confidence at pre-pandemic levels, and spending levels higher than they were in 2019, the future does look more optimistic. Having said that, it will take longer for the worse-hit sectors to recover from the pandemic.

“SMEs are the backbone of the UK economy, but many have been badly affected by the pandemic. The restructuring community is better placed than ever to help them and other organisations with financial worries, but if directors leave it too late to ask for help, they will have fewer rescue or recovery options open to them.”

Increase in payment holidays

0010547430 (J MATTHEWS) — Fri, 13 Aug 2021 14:45:37 GMT

Research shows consumers taking payment holidays increased in March 2021

An increase in consumers making use of payment holidays (introduced by the Financial Conduct Authority (FCA) in March 2020 to support borrowers impacted, directly or indirectly, by Covid-19) suggests one in ten borrowers are still concerned about their finances, according to research from Equifax.

Consumers who took advantage of payment holidays were allowed to defer payments for up to six months. The latest data shows that mortgage static balances peaked at 18% in June 2020, and are now back to pre-pandemic levels at 4.3%. However, the number of unsecured loans with static balances hit a pandemic high of 10% in March, overtaking peaks in July 2020 of 8.5% and January 2021 of 7.7%.

Commenting on the research, Equifax UK’s chief data and analytics officer Paul Heywood, said: “As the economy re-opens and many of the pandemic’s emergency support measures are phased out, it’s important we recognise how successful they have been in protecting the financially vulnerable in the UK.

“There are still a few warning lights on the dashboard, and this spike in borrowers requesting payment holidays is a sign that we are not out of the woods yet, but early indications tell us that we have avoided a devastating spike in people defaulting on loans.

“For lenders, identifying people in, or about to enter, financial difficulty is going to be a key theme of 2021, especially as government support is curtailed. While for borrowers, the important thing for people to remember is that the end of these forbearance measures does not mean that there is no support available. A range of tailored support measures have been introduced in the last year, and guidance is readily available for those that need it.”

Insolvencies on the Increase

0010547430 (J MATTHEWS) — Mon, 09 Aug 2021 21:11:59 GMT

Q2 2021 Insolvencies Increase

The UK has seen the highest number of corporate insolvencies in 18 months, driven by a rise in Creditors’ Voluntary Liquidations (CVLs), which is an increase back to pre-covid levals.

There were 3,116 seasonally adjusted corporate insolvencies in Q2 2021, an increase of 31.4% compared to Q1 2021's figures of 2,371, and a rise of 4% compared to Q2 2020 (2,997).

There were 27,622 seasonally adjusted individual insolvencies in Q2 2021, a fall of 4.3% compared to Q1 2021's figures of 28,895, and a fall of 13.9% compared to Q2 2020 (32,134).

Colin Haig, President of insolvency and restructuring trade body R3 and Head of Restructuring at Azets, said:

“It’s hard to say what’s driving this increase in CVLs, but it could be that directors of a number of companies have decided they can no longer go on trading as a result of the pandemic, and are opting to close down their businesses by using the CVL process, before the situation deteriorates further.

“What is clear is that the figures published today show the toll the challenges of the last three months – and the twelve before them – have taken on the business community.

“While many business owners were hoping the lifting of the lockdown would help them, they reopened amid low consumer confidence, a time when people were being encouraged to stay local, and when the economy was still a long way from recovering from the blow the start of the pandemic dealt it. The formal end of lockdown may have improved their situation, but it wasn’t the boost many businesses had hoped for.”

Banks Strengthening Debt Collection Teams

0010547430 (J MATTHEWS) — Thu, 29 Jul 2021 21:30:24 GMT

Big 4 UK Back Preparing for Covid Loan Collection

With emergency covid loan payments becoming due, the UK’s High Street banks are hiring staff and strengthening their debt collection teams in preparation for the large amount of defaulted payments that has been forecast.

It is reported that up to 750 staff have been hired by the UK’s four largest banks as they face up to the major challenge facing them. Natwest is reported to have taken on an extra 150 debt collection agents to handle recovering overdue covid loans while HSBC has taken on up to 200 extra staff to help tackle the expected loan defaults.

As part of their training, the new banking debt collection teams will be ordered to demonstrate empathy with business owners in difficult financial situations. This is in line with FCA requirements and directives issued. The softer approach is an attempt by the banks to avoid a repeat of the reputational damage incurred following accusations of heavy handed and aggressive debt collection practices during the 2008 financial crash.

The UK government initially estimated that losses on the most popular bounce back loan scheme could be as high as sixty per cent. This loan enabled small businesses to borrow up to £50,000, yet is rumoured to have been manipulated by fraudsters.

21k owed on average to SMBs

0010547430 (J MATTHEWS) — Fri, 16 Jul 2021 15:20:16 GMT

9 in 10 SMBs with an overdue invoice

Data from Intuit Quickbooks reveals that small and medium-sized businesses (SMBs) in the UK with at least one overdue invoice are owed £21,373 in late payments in May 2021. This figure represents more than two thirds (67%) of the average SMBs typical monthly turnover.

Almost nine in 10 SMBs (87%) had an overdue invoice in May, and with Covid really magnifying cashflow problems, the average amount owed to SMBs has risen by more than £3,500 in the past three months (£17,777 – February 2021) and more than £4,500 annually (£16,840 – May 2020).

Late payment can push many SMBs into financial difficulty, and the data collected suggests that on average, SMBs experiencing late payments aren’t paid for more than a week (7.7 days) after their invoices are due. Typically, SMBs require instant payment (64%) although a third (31%) offer invoice terms between 1 and 15 days, and 5% offer invoice terms between 16 and 30 days.

Chris Evans, VP and UK country manager at Intuit QuickBooks, comments: “Late payments have long been a burden for the small business community, and Covid-19 has only heightened this problem. With other businesses increasingly withholding or freezing payments to protect their own finances, overdue payments can cause serious cash flow problems, particularly as small businesses typically don’t have large cash reserves to fund expenses or bills. Even a delay of just a few days could be the difference in their bank balance tipping into the red.

If your company is experiencing problems with late payment then contact Collection House, as we have the expertise to get your overdue invoices paid – as we have done for over 20 years. With our secure online portal, you can get updates on your delinquent accounts 24/7.

Thinking About Late Payment

0010547430 (J MATTHEWS) — Tue, 06 Jul 2021 21:17:57 GMT

According to the latest edition of the European Payment Report 2021 by Intrum, their research has led to half of companies surveyed saying they were lucky to have survived 2020.

Many businesses have taken the opportunity during the pandemic to tighten payment terms and focus on liquidity. Cash flows and revenues have proved more resilient to the pandemic than expected, according to a third (34 per cent) of UK businesses - above the European average. However, UK firms were also more likely than their European counterparts to have made redundancies – with one in five doing so.

Over a half of UK firms say the pandemic has prompted them to get better at managing the risk of late payments. The report shows that businesses have tried to cut payment times and become stricter about their payment terms to customers. In 2021, 50 per cent said they had accepted longer payment terms than they are comfortable with in order to protect the customer relationship – although high, this is down from 80 per cent in 2020.

The payment gap (the gap between agreed terms and the actual time taken to pay) has also narrowed across all customers types, falling from ten days to eight for consumers, 19-12 days for B2B customers and 23-11 days for the public sector. The pandemic has clearly focused minds on late payment – 56 per cent said it has increased their awareness of the impact this has on small businesses.

However, it is not clear that his will create lasting change, and almost two-thirds (62 per cent) are more concerned than ever before about their customers’ ability to pay, predicting that the risk of late payments will increase over the next 12 months. In addition, 46 per cent believe the payment gap is a real risk to the sustainable growth of their business.

Extension to Temporary Insolvency Measures

Tue, 29 Jun 2021 18:25:24 GMT

Extra Breathing Space for UK Businesses

The UK government is set to extend temporary insolvency measures which includes restrictions on issuing winding up petitions and statutory demands. The restrictions will last for a further three months until 30 September 2021.

The restrictions were introduced in the Corporate Insolvency and Governance Act 2020 and were designed to protect businesses during the pandemic from aggressive creditor enforcement and removing personal liability on company directors. The extended measures will provide UK businesses with much needed breathing space as they attempt to bounce back from Coronavirus.

Christina Fitzgerald from trade body, R3 said:

“Many companies across the country will appreciate the action the Government has taken today – particularly given the delay to the easing of lockdown announced earlier this week.

“Trading conditions have improved recently, but the Prime Minister’s decision to delay the removal of the final lockdown measures underlines that we’re still in choppy economic waters.

“While the extension of these measures will benefit many companies, as time goes on the Government will need to consider the impact on creditors – who have staff and overheads to pay themselves. Balancing these interests is a difficult task for the Government.

Credit Control - Improve your Cashflow

Fri, 11 Jun 2021 20:09:23 GMT

The importance of effective credit control

Credit agreements and payment terms are very important. However, without proper credit control or debt management, it’s likely that most companies will experience late payment, with the result being cashflow problems.

Improving cashflow, getting debts paid and being able to recognise when a client may be in financial difficulty are key to ensuring you get paid on time, and in some cases, may be the difference from being paid at all. Late paying clients can affect all parts of your business: from paying staff, to buying resources, to marketing and growing your business.

If you have a credit control department but you are still receiving late payments, then this may be a sign that your existing processes need to be tightened. It may be that your credit limits are set too high or payment terms too lax, or simply a case that you have the wrong client contact.

If your credit is becoming bad debt far too regular, then you may need to outsource your credit control and debt recovery services to Collection House where our professionally trained staff can make a real difference to your cashflow. Contact us today on 01225 762044 where we can discuss your requirements and our services.

New Powers to Investigate Directors

0010547430 (J MATTHEWS) — Fri, 28 May 2021 08:13:44 GMT

New Powers for Insolvency Service

New powers are to be given to the Insolvency Service to investigate directors of companies that have been dissolved, closing a legal loophole and acting as a strong deterrent against misuse of the dissolution process.

Currently, the Insolvency Service has powers to investigate directors of live companies or those entering a form of insolvency. If wrongdoing or malpractice is found, directors can face sanctions including a ban of up to 15 years.

The process will no longer be able to be used as a method of fraudulently avoiding repayment of Government backed loans given to businesses to support them during the Coronavirus pandemic.

The change in law will also help prevent directors who set up near identical businesses following the dissolution, often leaving customers and other creditors, such as suppliers or HMRC, unpaid.

The new measures which are included in the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, had its first reading in the House of Commons earlier this month. The measures are retrospective and will enable the Insolvency Service to also tackle Directors who have inappropriately wound-up companies that have benefited from Bounce Back Loans.

Business Secretary Kwasi Kwarteng said “As we build back better from the pandemic, we need to restore business confidence, but also people’s confidence in business – which is why we will not hesitate to disqualify directors who deliberately leave employees and the British taxpayer out of pocket.”

“We are determined that the UK should be the best place in the world to do business. Extending powers to investigate directors of dissolved companies means those who have previously been able to avoid their responsibilities will be held to account.”

Insolvency Stats for Q1 2021

Wed, 12 May 2021 16:45:39 GMT

Latest Insolvency Stats

The insolvency statistics for Q1, 2021, covering corporate and individual insolvencies in England & Wales, have been released by the Insolvency Service.

During this period, corporate insolvencies fell 21.9% (2,384 corporate insolvencies) compared to Q4 2020 when there was a total of 3,053 corporate insolvencies, and a fall of 38.3% when compared to Q1 2020 (3,863).

The insolvencies are the lowest total per quarter on record, suggesting that Government Covid support measures are still helping businesses; however, insolvencies did increase during February and March, suggesting that there may be difficult times ahead.

As for individual insolvencies, there were 29,140 individual insolvencies in Q1 2021, a fall of 5.3% compared to Q4 2020’s figure of 30,769, and a rise of 0.7% compared to Q1 2020 (28,936).

UK Gov Lending Increase during 2020

0010547430 (J MATTHEWS) — Fri, 16 Apr 2021 15:45:35 GMT

UK Borrowing increase in 2020

Lending to small and medium-sized businesses across the UK was 162 per cent higher in 2020 than it was during 2019, says a report from UK Finance which represents businesses in the UK’s banking and finance industry.

The reason for such an increase in borrowing is of course mainly down to the UK’s Government-backed lending schemes to support and help SMEs survive the pandemic, and develop new strategies, products and business models. The report found that though many SMEs have needed the use of finance support, some SMEs have put the money aside for the future. Nationwide deposits were 28 per cent higher at the end of 2020 than they were a year earlier. This suggests that firms are leaving cash in reserve.

Extra Resources for HMRC

Sun, 04 Apr 2021 22:14:34 GMT

D ebt owed to HMRC has trebled

HMRC are facing a dilemma with regards to the unprecedented amount of debt owed to them by UK businesses, an amount that has trebled from 2019 to £65.5bn. A considerable amount of this money, £26.6bn, is sufficiently in arrears to permit HMRC to take enforcement action.

There are also concerns around fraudulent claims for coronavirus support with £35bn of the outstanding amount owed made up of emergency coronavirus support policies.

HMRC itself has been given extra money and resources to pursue overdue loans. It has extra powers as it is now classed as a preferential creditor in any insolvency since December 2020.

Nevertheless, HMRC must strike a balance of taxpayers’ interests, recovering money and risking insolvencies in the longer term.

Small Business Commissioner urges action on late payments

Thu, 25 Mar 2021 18:52:58 GMT

Tougher stance needed

IPSE, the Association for Independent Professionals and the Self-Employed, which represents freelancers, contractors, and independent professionals in the UK have called on the Small Business Commissioner, Liz Bradley, to take a tougher stance to late payment. The problem of late payments has been magnified during the Covid-19 pandemic.

Research by IPSE has shown that 36% of freelancers have been adversely affected during the pandemic. Moreover, one in six freelancers have been left with no money to cover work-related expenses. Bradley is expected to lead the charge to help small businesses secure payments owed to them, with £23.4 billion of unpaid invoices.

Ms Bradley said: “We need a real culture change around business payments in the UK to take pressure off our phenomenal entrepreneurs. People who have already delivered goods and services have to turn their attention to the next client order rather than chasing up late payments and worrying about their cashflow. I know from personal experience how damaging that can be to mental and emotional health.”

Importance of Credit Control

0010547430 (J MATTHEWS) — Tue, 16 Mar 2021 20:35:04 GMT

Importance of Credit Control

Having a great business idea and a robust business plan is a great start.

Starting a new business requires time and a lot of focus, and credit control isn’t always that high on the list. As a result, many businesses can run into cashflow problems a lot sooner than expected – which is the reason why so many new business start-ups can fail.

Without the right focus on cashflow your business can soon run into problems. Even large enterprises can come into difficulty through the negative impacts of weak cashflow. According to research, around 56.4 million UK business hours a year are wasted chasing late payments.

At Collection House we offer a comprehensive credit control service, allowing you to spend more time on your own business – so you can work on improving business processes, marketing and sales.

We at Collection House provide credit control services for companies around the UK. We act as part of your team and build upon your customer relationships. We can act as a “traffic light system” for you if we think one of your clients is in financial difficulty.

Collection House can take on the burden of your credit control, and we offer three packages to suit your business needs: Bronze (3 month Contract), Silver (12 month contract), and Gold (24 month contract).

Why use a Commercial Debt Recovery Agency?

Thu, 04 Mar 2021 19:30:40 GMT

Why use a commercial debt recovery agency?

Chasing an overdue debt can be frustrating, time consuming, and further stretch your resources. All of which are likely to mean that your overdue debt can be even more costly – especially if you’re a smaller business and you’re spending excessive time chasing unpaid invoices, and neglecting other parts of your business.

So what is the right circumstance when you should instruct a professional?

If the debt is significantly overdue , then the sooner you instruct a professional then the more chance of it being paid. Usually, the older the overdue debt, the more difficult it is to get paid.

If you’re being ignored ! It may seem an impossible task if you are not receiving any response. We have tools available to be able to trace and contact your debtor.

The invoice may be disputed , in which case, our professional staff can bring real benefits. If the customer is denying responsibility for the invoice or making a complaint in order to avoid making the payment, then we can act as a mediator to try to uncover the reason for non-payment.

Repeat offenders . You may be surprised how many times businesses experience late payment from the same clients – constant promises of payment only to default. We can give your client the right encouragement to ensure payment is made - and on time in the future - whilst protecting your relationship with them.

If your client is experiencing financial difficulties, we can advise on the best course of action. The sooner you take action, the better, as another supplier could have already instructed a third-party and been paid.

Covid Impact on SME Date

Thu, 25 Feb 2021 20:31:35 GMT

Covid Impact on SME Debt

New research from Sage has revealed the difficult trading conditions ahead for small and medium sized businesses (SMEs). Following the latest (and current) lockdown, the research from Sage has further divided the outlook of SMEs with one-third worse off than November, one-third in a similar position and one-third better off.

Half of SMEs have an average debt burden of £173k per year having taken out some sort of Covid related loan. Only 63% are confident of being able to repay.

Half of previously profitable SMEs before the pandemic are no longer profitable, with redundancies being likely. A fifth of SMEs have made redundancies to date, but a quarter more will be forced to make cuts when the furlough scheme ends.

The majority of SMEs support a cut to VAT to stimulate demand.

There is some encouraging news with over half of SMEs that were surveyed said that if “business as usual” resumed tomorrow, then productivity would have improved compared to a year ago, with a third saying digital tools will help boost efficiencies. SMEs are hoping for financial incentives in order to invest in technology.

With the Covid loan repayment period looming, polling has revealed that just under half have taken out loans because of the pandemic. The most popular form of borrowing is Government-back loans (12%), borrowing from friends and family (8%) and private business loans from commercial lenders (8%).

Late Payment Fees

Fri, 19 Feb 2021 16:25:29 GMT

Late Payment Fees

Did you know that if you’re a UK based business, then you can claim late payment fees on overdue business to business debts? To be pedantic, it’s the Late Payment of Commercial Debts (Interest) Act 1998 (as amended).

Collection House is a specialist when it comes to collecting late payment fees. However, unlike any other debt recovery agency, we pass all late payment fees onto you: our client.

Amount of Debt Compensation

Up to £999.99 £40

£1,000 to £9,999.99 £70

£10,000 or more £100

Collection House has collected hundreds of thousands of pounds over the years in late payments fees alone. If you have overdue commercial debts then we can claim what you’re entitled to.

Latest Figures from Insolvency Service

Thu, 11 Feb 2021 21:41:18 GMT

Pandemic starts to show in UK insolvency figures?

In the latest figures from the Insolvency Service, personal insolvencies increased by 57% in the third and fourth quarters of 2020.

For the whole of 2020 there were 111,424 personal insolvencies, which represented a 9% decrease on 2019. The breakdown of insolvencies is as follows:

78,478 individual voluntary arrangements (IVAs) – a 1% increase from 2019
20,321 debt relief orders (DROs) – a 25% decrease from 2019
12,625 bankruptcies – a 25% decrease from 2019

The total number of bankruptcies in 2020 was the lowest since 1990. The increase in personal insolvencies in the final two quarters may be a sign that the pandemic is starting to show in the official insolvency figures.

Business insolvencies in Q3 and Q4 of 2020 also showed an increase of 17%; however total business insolvencies for the whole of 2020 were 27% less compared to 2019 – perhaps a sign of government measures to support businesses during the pandemic.

Powerful Management Tools at Your Fingertips

Thu, 28 Jan 2021 19:16:11 GMT

Collection House Online Portal

All clients of Collection House are able to benefit from our secure Online Portal, giving you 24/7 access to the accounts that you have instructed us on.

The Online Portal is a powerful tool for clients, providing you with a wealth of information and tools at your fingertips.

The online portal permits users to:

Track performance
Run bespoke reports
Access any individual account referred
View letters sent
Read file notes and emails sent
View payment history
Add notes/comments

The Online Portal keeps you involved, provides transparency and can be tailored to your requirements, empowering you to keep in control of all your accounts.

Examples of some of the tools available:

Debt Value per month
No. of debts per month
Values collected per month
Late Payment Fees Collected by Month

What to look for when choosing a debt recovery agency?

Fri, 22 Jan 2021 12:19:27 GMT

What to look for when choosing a debt recovery agency?

As cases of late payment rise in these difficult times, more and more businesses are looking to source a cost-effective solution to collect unpaid invoices. So what should you look for in a debt recovery agency? There are many professional agencies, but as is often the case, there are a few unscrupulous agencies out there.

Many agencies promise “No Collection, No Fee”. This a slogan used by many, but not all agencies can back this us and they can also have hidden fees.

When choosing a debt collection agency, such as Collection House Ltd, you should expect nothing less than the following:

An honest, ethical and transparent agency that is professional and competent – Collection House have been trading for over 20 years so you’ll be in good hands
Accredited and appropriately licensed
Highly trained staff – we have MCICM accredited staff members
A proven track record
Relevant industry experience (such as experience of collecting money in the public sector or construction)
A transparent fee structure
Hold business reputation in high regards
Update of progress – Collection House are able to update you on progress and we have our own portal

Collection House Ltd - 20 Years Trading

websitebuilder@yell.com — Wed, 06 Jan 2021 20:57:57 GMT

20th Year of Trading

Collection House Ltd are proud to be entering our 20th year of trading as a limited company – no mean feat considering the difficulties facing many companies, especially with the hugely testing financial conditions that we all face.

The average age of a company registered in the UK has gradually declined since 2000 to be 8.5 years, and between 2018 and 2019 there were 508,865 company dissolutions.

The importance of reducing your aged debtor list and getting paid on time has never been more important. The longevity of Collection House is underpinned by our provision of a first class commercial debt recovery service where we have continually outperformed our competitors. In addition to our debt recovery service, more companies are outsourcing their credit control to us. Our credit control services are a cost-effective way of improving cashflow and discovering potential cashflow issues early is vitally important for any successful business.

Contact Collection House today on 01225 762044 so we can help your business

One in seven business SMEs use personal savings to keep business afloat

websitebuilder@yell.com — Thu, 11 Jun 2020 14:55:56 GMT

One in seven business SMEs use personal savings to keep business afloat

The coronavirus pandemic is causing SME owners across the country to take drastic action in order to ensure their business survives. According to research by Nucleus Commercial Finance, one in seven (14%) are using personal savings for immediate financial support despite the options available from alternative lenders.

Only a quarter (25%) of SMEs have avoided taking the option of using personal savings as they already had enough cash in the bank to survive the crisis. This demonstrates the vulnerability of UK’s SMEs when it comes to having the finances in place they need to secure their long term viability and to protect themselves from any future crises.

Two fifths (44%) of SMEs said they have been negatively impacted by coronavirus and the subsequent lockdown – they have either applied for or considered seeking additional financial support. Of this group:

13% have extended an existing loan/finance facility

12% have already taken out a new loan/finance facility

11% are considering applying for a loan/new finance facility

7% have applied for a loan/new finance facility

Chirag Shah, CEO, Nucleus Commercial Finance, said: “As the economic impact of the pandemic becomes clearer, it is alarming that SME owners continue to use personal savings to support their business. While some owners might believe that this is the best option for short-term cash flow needs, taking this measure can have a detrimental effect on the business and also their personal situation, especially if activity does not improve immediately once lockdown measures are eased.”

“Entrepreneurs should know and be reassured that there are flexible finance options available; we have already approved more than £100m in funding to SMEs since the coronavirus outbreak, providing both short and long-term facilities to ensure they have the financial support to get through this challenging time.”

Commenting on the findings Tim Vine, European Head of Finance & Risk Solutions at Dun & Bradstreet said “Small businesses are the ‘engine’ of the UK economy, making up the majority of the UK’s private companies. When Dun & Bradstreet surveyed small and medium enterprise (SME) owners pre-pandemic, only half (49%) of respondents felt having access to finance was critical for success – but times have changed. Funding is becoming a lifeline for many small businesses who are facing serious financial challenges due to COVID-19 with 42% of the trading businesses reporting they have cash reserves to last less than six months and many facing an uncertain future.”

“Despite UK businesses borrowing nearly £35bn from banks and alternative lenders through the three main emergency coronavirus schemes, recent research suggests that one in seven SMEs are using personal savings to help them survive the pandemic. Dun & Bradstreet’s pre-pandemic survey also found that 23% of respondents said they would turn to family members and friends for financial support with 25% using a private investor, rather than applying via banks or government schemes.”

“With over 960,000 applications for the Bounce Back Loan scheme and a further 93,000 for the Coronavirus Business Interruption Loan Scheme, lenders will be taking into consideration data such as credit scores, payment performance and financial health when taking decisions. It is important for businesses to have a viable proposal and repayment plan to ensure a sustainable long-term recovery.”

From Credit-Connect

Scam Alert - Important!

websitebuilder@yell.com — Mon, 23 Sep 2019 10:22:44 GMT

Have you received a text message asking you to contact Collection House?

There is a nasty scam going around where a company "unknown" is asking individuals to contact Collection House immediately to try and get hold of their personal details and even worse trying to get them to make a payment.

The contact number they are giving out changes often and is not connected in anyway to Collection House Ltd

If you have received a text message or email and are concerned, then by all means give us a call on 01225 762044.

This has been reported to the relevant authorities.

Sorry for any inconvenience caused

Why support your local businesses?

websitebuilder@yell.com — Mon, 23 Sep 2019 10:22:44 GMT

We understand the importance of supporting local businesses.

Our head office is located in Trowbridge, the county town of Wiltshire. We have been providing Debt Recovery and Credit Control services to hundreds of local businesses for the past 19 years. We look to provide our local economy with a number of services including Debt Recovery, Credit Management and Outsourced Credit Control. We understand how important high streets and small businesses are to local people, so we ensure their Sales Ledgers are as clean and as up to date as possible to improve Cash Flow and to reduce Bad Debt.

Here is a list of just a few reasons why you should support your local economy.

Research shows that just £10 spent with a local independent shop means £50 back into the local economy. This means that you can indirectly make a big impact on your local community with very little cost to you.

Creating local jobs: When there’s an increase in demand, there's always an increase in supply. Buying or using the services of a local business can boost the employment rates in your area by increasing the need for more workers.

Building relationships: It is reassuring to have a local business to go to, someone to talk face to face with. Larger companies will often provide you with a phone number for their customer service team, which is often not in the UK, to then be put through to a call centre. This is simply not the case with a local business. They often prefer to meet face to face to engage with you so that your wants and needs can bet met.

The environment: The attraction of next-day delivery makes it hard to resist shopping online. However, when you add up the costs of that delivery on the environment, packaging and the fuel to transport the goods, buying local is much better for the environment.

Encouraging Entrepreneurs: Shopping locally and using the services of businesses in your local area supports local entrepreneurs and by helping their businesses to grow, you’ll be helping the local economy by increasing the number of jobs in your area.

Helps add character to your local area: The local businesses in your high streets give your community an individuality that won’t be found anywhere else, helping to attract visitors and tourists to your local area.

At Collection House we like to show our support to the local community by hosting regular charity events and also by offering clients within a 20 mile radius special offers such as "first debt referral free". We also believe in using local suppliers for our business needs to ensure we do our bit!

The benefits of using a Debt Collection Agency and what makes us stand out from the rest?

Mon, 23 Sep 2019 10:22:43 GMT

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