Insolvency arises when a business can no longer meet their financial obligations to their lenders as debts become overdue. It can arise from poor cash management, a reduction in cash inflow, or an increase in expenses – all of which are likely to be experienced in one way or another by a company during its lifetime.
Last month saw the total number of UK company insolvencies for the year 2021 rise to 15,334 – although this is a marginal decrease from the same period in 2020, the number has been rising steadily since August 2021.
A total of 1,971 companies became insolvent last month according to CreditSafe; an increase of 19% compared to the month before.
This is a trend that has continued since the Summer. The increase in insolvencies overall is undeniably a reflection of the extraordinary circumstances that the world has experienced as a result of the pandemic and subsequent lockdowns.
Although plenty of businesses managed to defy all odds and keep afloat during the hardest times last year, this is undoubtedly down to relying heavily on the available government support. However, as these schemes have gradually come to an end, reserves of cash have been grower shorter for many businesses which means the trend of business failures rising is liable to continue for the remainder of the year and likely much of 2022.
If your recruitment agency works within the contract market supplying temporary workers in any capacity at all, then debt is unavoidable.
How that debt is managed is vital.
Having a lender that is able to get credit where most others can’t, may well be an important tool for your toolkit going forward; Quba have a policy with some of the most senior underwriters meaning we tend to be able to secure the required credit for our clients – and in the cases where it isn’t possible, we are able to offer help and advice on why.
The importance of having a finance provider who knows what they’re doing is more vital than ever.
The dangers of bad advice are starkly brought to our attention by our clients on a regular basis – there are providers out there offering finance without cover just because of a misunderstanding of certain clauses. It’s a dangerous game to play and not one that you should ever join in with!
We know the game.
We know the market.
We don’t want anyone overtrading, but we understand that it’s an important option for recruiters who need the flexibility to make the most of their own business.
Protect your business from insolvency and failure by making sure you’re supported by finance and credit providers that know your market inside and out and can help you navigate the stormier seas – not just the fair weather. To see more of what Quba and the DynamiQ platform can do watch our introductory video or book a demo with one of our funding professionals now.