According to data from Red Flag Alert, UK bad debt is set to spike following the recent restrictions imposed and rise further in 2021.
According to an article by Red Flag Partner, Mark Halstead, it’s likely that economic disruption caused by COVID‐19 will see unpaid business debt double to more than £8.6bn this year. He highlights;
- Disruption caused by coronavirus will mean companies have to write‐off £8.6bn in unpaid invoices in 2021
- Bad debt will peak again in 2021 with companies facing a total of £24bn in write‐offs
- Long tail effect of debt will see companies affected by the pandemic continuing to go out of business in the next 18 months
- Professional services and construction most at risk of insolvent debt
Pre Covid, data reported there were 490k businesses in significant financial distress before the virus and the the rate of failure is set to rise substantially following the impact of the pandemic.
Mark goes on to say that according to The Insolvency Service over 17,000* companies went out of business in 2019. Analysis by financial risk firm Red Flag Alert showing this meant £4.3bn of invoices were written‐off. And, based on Red Flag Alert’s financial modelling of insolvent debt over the past three years, this level of bad debt will spike during the coronavirus lockdown and rise further in 2021.
While the impact of COVID and the insolvencies that will follow are, at this stage, unavoidable, acting early is key to ensuring that your risk of bad debt is minimised. Ko-bolt offers a FREE final demand letter which is designed to prompt your customer into paying quickly while safeguarding buyer-supplier relationship and our unique email tracking facility means we’re able to determine if further action may be require to secure payment, which is available on a no collection, no commission basis.