Unpaid UK Business Debt owing to firms across the country’s core 11 sectors has increased by £580m more over the past three months compared with the last three months of 2017, according to latest figures from Business reporting Agency Creditsafe.
After dropping to a yearly low in Q4 2017 with £157.9m being reported as being unpaid bad debt, the number of debts filed as unpaid in the first quarter of 2018 reached £738.7m, a rise of 366.1% year-on-year.
The average value of debts included in the report showed a whopping increase of 365.9% over the last 12 months to a staggering high of £929,875 per outstanding payment.
With companies such as Gemini PLC going into liquidation whilst owing suppliers and contractors, it is no huge surprise to see this jump in unpaid business debt figures.
In terms of Business Debt Collection, the number of County Court Judgments (CCJs) rose in the first three months of 2018 compared to the previous quarter.
A total of 18,781 County Court Judgments were filed representing an increase of 23% on the previous quarter however the average value of CCI’s issued dropped to £40,433.
The quarterly report also showed that 4,567 companies had failed in the first three months of 2018, a rise of 28.3% on the previous quarter.
Companies included in these statistics are included Carillion, which entered liquidation with a turnover of £6.5Bn and Toys “R” Us, who went into administration also with a massive turnover.
Ceo of Creditsafe, Chris Robertson commented “High profile corporate collapses and scandals in the last three months have been costly and undermined confidence in UK business.“It’s particularly disappointing following the previous three months, where we reported a fourth-quarter rise in sales and fall in bad debt. In the last three months, we have seen more than 1,000 companies fail, a rise of over a quarter.”
“Following the collapse of Carillion, the construction industry saw a fall in sales of 6.2%, a rise in debt owed to the sector of £4.3m, a 73.3% increase in company failures and 484 more CCJs. That is just the short-term impact in one sector. We are seeing similar challenges across other industries and it’s a waiting game to see what the mid to long-term future will deliver.”
Chris Spencer, Operations Manager at leading Business Debt Collection firm – Federal Management said “Whilst the collapse of Carillion and and Toys R us will have had a major influence on these figures, the rise of Business CCJ’s should present a warning to Businesses to be on guard against non paying clients”
“A Professional Debt Collection service can be of major value and no Business has ever lost a client, simply because they were required to pay what they rightfully owed”