For help please call Sarah on: 0114 285 9500

For help and advice contact Sheffield 0114 2859500 or Rotherham 01709 331300 or Huddersfield 01484 483095

For help and advice contact Sheffield 0114 2859500 or Rotherham 01709 331300

Concerns raised over insolvency ‘domino effect’

A leading insolvency trade body has voiced concerns that the knock-on effect of business failures is a serious problem for over a quarter of UK companies.

The research, carried out by the Association of Business Recovery Professionals (R3), has revealed that 26% of companies suffered a hit to their finances following the insolvency of a customer, supplier or debtor in the first six months of 2018.

This so-called ‘domino effect’ puts other businesses at risk by jeopardising their financial future, either directly if they are unable to recover money owed to them or if they lose contracts or orders, or indirectly, if they lose suppliers and key links in their supply chain.

There are key steps that companies can take to mitigate the risk of being affected by the insolvency of other businesses in their supply chain.

These include keeping close watch on credit terms with customers and ensuring that they are financially robust; avoiding becoming over-reliant on a small number of key customers or suppliers; and having a back-up plan in case the worst should ever happen. There is also the possibility of insuring against bad-debts. These policies can provide reassurance that bills will be paid even if your customer goes bust, however it is important to take advice from specialists before signing up. Talk to your insurance broker or contact us and we can put you in touch with brokers who can provide unbiased advice.

We are often contacted by businesses that are struggling due to the demise of their customers or key suppliers. The good news is that there are a range of turnaround procedures that are available to help rescue businesses that have suffered a bad debt or lost a key contract. Provided that the business is fundamentally viable in the long term, it is often possible to formulate a turnaround plan that keeps the company in business, safeguards jobs and provides a better return to its creditors than if it went bust.

If you are concerned about your company’s future, call us today to find out how we can help your business to survive and thrive. Call Deborah Lockwood on 0114 285 9500. We can help.

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