Moving your business from the startup to scale-up
4 December 2024
Read moreAs we approach the end of the year, one trend has become increasingly concerning for UK businesses – debts are on the rise.
According to a recent report, small to medium-sized enterprises (SMEs) have seen the value of bad debt surge by 127 per cent over the past six months.
This figure is alarmingly high, raising important questions about what is driving this increase and how you can take proactive steps to mitigate its impact.
Bad debts refer to money owed to a business that is deemed uncollectible, often resulting from customers’ inability or unwillingness to pay, which can negatively impact cash flow and profitability.
While many businesses and individuals have seemingly moved on from the pandemic, the economy is still suffering from its lasting effects.
Some SMEs are still struggling to recover, facing cash flow issues and fluctuating demand, all of which have been exacerbated by political instability and uncertainties surrounding the recent Budget.
Additionally, with the cost of living still so high, many individuals and companies are prioritising their essential expenses, leaving bills and invoices further down the list.
This situation poses significant challenges for SMEs, which typically do not have the same financial buffers as larger corporations.
Solutions to crack down on bad debts
If your business is facing bad debts and you are neglecting them, you are exposing yourself to cashflow issues, a poor credit rating and possible bankruptcy or liquidation.
To avoid such outcomes, there are a number of solutions you can utilise, including:
For businesses facing bad debt challenges, we strongly suggest you discuss the issue with an experienced accountant who can provide strategic solutions to you and your team.
With bad debts on the rise, you cannot afford to take a reactive approach – it is time to crack down.
For expert assistance and customised solutions for handling debt, contact our accounting team today.