The news has emerged this week that more than 30,000 businesses in the East of England were owed money by at least one supplier or customer which went into insolvency last year.
Research undertaken by the eastern branch of insolvency trade body R3, shows that a total of 34,000 local businesses (which equates to around 11% in the region) were creditors in an insolvency procedure in 2015 and of those businesses, a total of 20,000 were creditors in two insolvencies last year.
Nationally, the figures show that medium-sized businesses – those employing 51 to 250 people – were most likely to have been exposed to another firm or individual’s insolvency, with one-in-seven (14%) of these businesses owed money by an insolvent individual or company.
As we know, business growth has accelerated in East Anglia and with many owners keen to take on new customers in order to grow more aggressively, they may have been more lapse with following internal credit control procedures.
It is essential that all new businesses that you are dealing with undergo a full credit check to ensure they are credit worthy– remember, it might be exciting to close the deal, but only if they can pay! Taking action right at the outset reduces your exposure to others’ insolvencies and enables you to make decisions about the type of person or firm that you would like to deal with.
It is also important that you have procedures in place to ensure you can frequently measure any changes to credit worthiness, annually as a minimum. A supplier who passes the initial credit check may well have been impacted by an unpaid bill and the problems could easily be passed down the line to you! It’s worth remembering that if a supplier lets you down, you could easily let your customers down, impacting your business and reputation.
If you or your business have been impacted by a supplier or individual entering into insolvency, get in touch today to find out how we can help: 0800 246 1845 / mail@leading.uk.com
