Bad debt: the crisis hiding behind today’s insolvency figures – commentary from Bibby Financial Services CEO
Derek Ryan, CEO for North West Europe at international SME funder Bibby Financial Services: “Today’s Company Insolvency Statistics reveal a 7% month-on-month increase in insolvencies pointing to a worrying trend for businesses, who are dealing with high costs, trading volatility and burgeoning energy costs since the start of the Middle East conflict.
“The latest insolvency figures show how tough trading conditions remain for UK businesses. Bad debt, late payment and tight cashflow are already causing serious problems for many SMEs. Rising energy costs linked to the Iran conflict are likely to add further strain.
“Our research shows how fragile cashflow has become. UK SMEs are owed an average of £66,770 in unpaid invoices, up 10% on last year. Nearly a third have had to write off around £30,000 over the past year because customers went bust or failed to pay. For many firms, a single missed payment could be enough to tip them into trouble.
“The government has started to address late payment, but progress needs to be faster. Soaring business costs also need urgent attention this year, or insolvencies are likely to rise further.”