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Experts warn of ‘debt tsunami’ on the horizon

The insolvency profession has sounded warnings for quite some time about a predicted ‘debt tsunami’ resulting from the COVID-19 pandemic. And now it looks like it’s finally arrived. But what can businesses do to get ahead of the wave?

Cashflow shows no signs of improvement and inflation will continue to surge in the coming months – compounded by the cost of living crisis, high inflation, supply chain issues and soaring energy prices.

North East businesses are already feeling the impact. And experts at leading law firm Muckle LLP advise it is crucial for those with debt owed to seek advice at the earliest opportunity to get customer invoices paid more quickly.

According to figures released in February by industry body R3, North East companies had almost 670,000 unpaid invoices on their books and more than 38,000 regional businesses had overdue bills. It also looks like the cashflow squeeze is starting to translate into formal insolvency procedures.

February 2022 saw the total number of company insolvencies rise by 13 per cent compared to February 2020, and 121 per cent compared to February 2021. This increase has been driven by creditors’ voluntary liquidations, which were 40 per cent higher than prepandemic levels*.

Julie Parr, director of business improvement at Muckle, says: “We understand the damaging impact this is having on businesses in the region. “Our clients tell us that chasing customer payments is a significant distraction from their business’ day-to-day running.

“But now isn’t the time to be complacent. “Your customers will likely have multiple creditors, so businesses that are proactive with their debt collection will see their invoices paid first. “If you’ve already asked for payment but not received it, then warned you’ll escalate and still haven’t been paid, then you need to seek help. “Using a professional service to collect payment saves you time, money and resources.”

Julie adds: “Our market-leading debt recovery team has an enviable track record, recovering 92 per cent of B2B debts. “We help you get paid more quickly, reduce debt write-off and, in some cases, reclaim more than the debt is worth.

“While results are important, we understand it’s a delicate topic and we ensure we act appropriately and ethically at what is a difficult time for many organisations. “We advise any business to seek professional help as early as possible to make the process seamless for all parties involved.”

Debt collection is becoming ever more sophisticated with technology speeding up the process, using insights to find the best way to recover monies owed. Muckle is leading the way in debt recovery with its easy-to-use online tool Muckle Collect.

The online portal allows businesses 24/7 access to submit and manage outstanding debts, making it easier than ever to log each invoice, agree on a strategy for recovery and track progress – either for a fixed cost or on a ‘no recovery, no fee basis’.

Muckle LLP
To find out more about Muckle Collect, visit www. muckle collect, contact the firm’s debt recovery team on 0191 211 7889 or email [email protected]

* The Insolvency Service’s monthly insolvency statistics for February 2022