As a result of the pandemic, 2022 is forecast to bring a significant increase in insolvencies which will likely lead to an increased risk of customer non-payment or late payment.
7 factors that will influence this increase include:
1) The Furlough Scheme ended in Sept 2021 and this will put pressure on businesses’ cashflow as they must now cover the wage bill.
2) Repayments of CBILS / CLBILS / Bounce Back Loans started in 2021 following the end of the repayment holiday.
3) Deferred VAT / Rent from 2020 now needs to be repaid.
4) The Reverse VAT Scheme for the construction sector was launched on 1st March 2021.
5) Brexit and Covid have created labour shortages and supply chain issues (availability of products and delays in delivery) which will impact trading performance.
6) Businesses increased their debt to survive lockdown, but this will now put pressure on them to perform well enough to repay the debt.
7) Winding up petition restrictions were removed on 1st Oct 2021 (creditors were restricted for circa 18 months) which will inevitably lead to an increase in insolvencies.
The Benefit of Trade Credit Insurance
Trade Credit Insurance can help you to mitigate this increased risk, and benefit from market intelligence which can be used to increase sales.
Trade Credit Insurance premiums remain competitive, but they are likely to increase due to market conditions.
The dedicated Verlingue Trade Credit team are happy to help businesses protect themselves from the repercussions of bad debts or late payments. If you have any questions, or would like to dicuss your business in more detail - please feel free to contact us on the details below.
Dave Pickup - Client Director
D: +44 (0) 2082 82 8579
M: +44 (0) 7394 570 047