Recovering aged debt
Following publication of the latest insolvency statistics, a mixed picture is being painted as the effects of the government interventions are felt, but concerns remain over the status of many companies amid fears there are now ‘zombie companies’ who have been provided a lifeline that will not secure a long term future.
In terms of insolvencies for companies, statistics show these have decreased by nearly a quarter (23%) in the second quarter of the year when compared to the first, and even further by 33% in comparison to the same quarter last year.
Individual insolvencies, including bankruptcies, IVA’s and Debt Relief Orders, however, have increased by 12% compared to the first quarter, but by only 7% compared to same quarter last year.
But what does this mean for recovering aged debt?
The figures could suggest that companies are faring slightly better than expected by taking advantage of the various business loan schemes and the furlough system which has allowed many companies to cut costs in the short to medium term in order to survive the initial shock.
If these companies have accessed the loan schemes then they should be using the funds to meet their liabilities, so now may be a good time to send an initial chaser letter requesting payment or payment proposals, or instructing solicitors to send a formal Letter Before Action. For companies and, critically, for individuals (considering there has been an increase in individual insolvencies) it may be prudent to try to open negotiation channels to get payments coming in before any further measures are taken at a local, regional or national level as we approach the critical winter period.
It would also be a good time to assess whether there is any public information suggesting your debtors are in trouble despite taking up the Government support. If so, this should ring alarm bells and accessing advice now would be a prudent first step. It is important to remember the restrictions on winding up and bankruptcy petitions remain in force until 30 September 2020 at the earliest, so it is more important than ever to take proactive steps as early as possible to maintain your cashflow.
For expert advice on debt recovery contact us at firstname.lastname@example.org