Written by: Ramon van Viegen – CFO at Onguard
Recently, the status of businesses across the globe has started to change. This is especially evident in UK industries and it has been evidenced in the press that the UK is set for one of the world’s highest rates of insolvencies. Many businesses are simply failing and going insolvent and with this number on the rise, it is important to gauge what the catalyst behind these failures is. Is it down to post-Brexit panic or simply poor credit management and borrowing practices?
As Brexit negotiations continue, there are increasing concerns over the financial impact this will have on the UK. This impact can already be seen in a recent report published by The Financial Times which states that insolvencies in the first quarter of 2018 alone, rose by 13%. Ripples of this rise can also be found in statistics relating to trade credit unions, who are currently paying out £4m per week in insurance claims.
It is becoming increasingly clear that the UK fall far behind the Nordics when it comes to certain technologies around finance and payments. It is certainly a lot faster and easier to make payments between businesses in the Nordic industries than it is in the UK. In general, the Nordics are regarded as one of the fastest in the world and this is definitely a factor in the lower insolvency rate across these countries, than of those seen across the EU.
Debts are rising, this isn’t a localised problem and is again, evidenced across the globe. Naturally, this rise in debts will be accompanied by insolvencies so bad borrowing or borrowing beyond the companies means will negatively affect a company and could see them dissolve as a result. (Ramon does say here that the UK are a little behind in… but I can’t work it out)
How to Help in this Current Economy
Whilst there isn’t anything specific companies can do to completely stop or slow the rate of insolvencies across the UK, as the factors are far out of anyone’s control, there are things that can be done to help, and in turn help restore the consumers faith in this uncertain economy.
It is vital to communicate with your customers, and this is the number one priority in all of OnGuard’s financial products. Whilst our software can segment customers and help guide a business as to when they should be communicating with their customers and what kind of support that customer may need, this still needs a certain amount of communication to work optimally. Your communication with your customer will help to ascertain as to whether they are an at-risk business or simply late on a payment and will also help to ensure that your invoice is always at the top of the pile. Should anything go wrong, even a part payment of an invoice is better than nothing, as claiming from an insolvency practitioner is a time-consuming hassle.
So, whilst the financial markets remain uncertain, and the true impacts of Brexit are still yet to arise, it is possible to keep your business financially stable. Constant communication is key and implementing the right financial software from Onguard can enable you to accurately stay on top of this.