The squeeze on personal cashflow caused by higher inflation, low wage increases and benefit cuts has resulted in personal insolvency reaching a six year high according to the Insolvency Service.
Personal insolvency jumped 4.4% in the second quarter of 2018 when compared to the first quarter. Staggeringly though, this is up over 27% when compared to the same quarter last year.
In total there were 28,951 personal insolvencies in the second quarter, driven mainly by the rise in in people taking out individual voluntary arrangements.
With no sign of inflation falling, sluggish wages rises and interest rates likely to rise, the situation is only likely to worsen.
What does this mean for you? If you owe money you need to ensure you borrow within your means and prepare for what could be a difficult time for many people in the UK.
If you’re owed money now’s the time to keep your credit control tight. Don’t let things slip and don’t be pushed around by debtors who avoid paying.
Common reasons why people don’t pay include;
- I haven’t received the invoice
- We weren’t happy with the service or product
- The bookkeeper is away
- We’re in liquidation
- The order number / PO was wrong
We hear these every week, in fact probably every day!
However, we’ve also heard other reasons why people haven’t paid! These include;
- The accountant is on maternity leave! We’re not being funny but business life can’t stop for 9 months, can it!!!
- The director has moved abroad! The company still needs to pay it’s debts! If it’s a personal debt we can trace people abroad. For limited companies we can still seize assets to get your money back.
- Someone bought the business and assets (yet the person who used to run the company still works there!!) – This is actually really common. People claim they’ve sold the business but we will push for proof of asset and business transfer! There are generally always ways to collect a debt!
What we’re saying here is make sure you keep on top of your credit control, and if you can’t you know where we are.