The most recent stats from the UK Insolvency Service show that rates are on the up as the recession deepens. Fact is, lockdowns have consequences and once Bounceback loans and 10K grants are exhausted so too are many small businesses. Add on energy price hikes of about 50-100% for takeaways, restaurants and pubs, plus general price inflation rated at 10% (official govt stats, far higher on some food items in reality) and you have the perfect storm. Maybe that was the plan behind Covid19 all along?
One thing every experienced insurance claims specialist knows is that financial stress can lead to increased fraud attempts, plus abandoned commercial premises are always a risk for insurers too.
Tanya Giles, head of SME business at Atradius, says: “This morning’s news of inflation returning to record highs will be concerning for businesses across the UK as they battle to stay above water. Outgoings are soaring across the board, and many employers will need to make some difficult decisions in the coming weeks and months to ensure their organisations have longevity.
“The news of firms becoming insolvent will become more and more commonplace as we enter 2023. In fact, insolvency rates are already well above pre-pandemic levels as companies feel the effects of the withdrawal of government support present throughout the pandemic. This year, 16,171 businesses have been made insolvent across England and Wales – which is 70.5%1 more than the same period in 2021.
“But businesses that build resilience will be able to weather the storm. It’s important for firms to act early, and we expect many are already working on recession management plans to outline how they will make efficiencies, opportunities for diversifying their income streams and protect and manage cash flow.
“Businesses also almost never go into insolvency overnight, and there are a number of warning signs suppliers need to look out for. Our early default detection checklist allows firms to carefully monitor suspicious behaviour from customers and puts them in the strongest position to be able to deal with any potential fall-out.”
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