Survival Plan Jigsaw

With more than half of the UK’s listed companies currently at heightened risk of insolvency, the need to tighten up credit control and debt control is never more prudent.

Companies of all sizes could face a financial cliff edge when various support measures come to an end, according to the latest EY analysis of profit warnings made by PLCs.

The accountancy firm’s analysis shows that between March 2020 and March 2021, 63 UK listed companies issued at least their third profit warning within a 12-month period, almost double the 2019 total of 32.

Potentially up to one in five of these firms are likely to enter administration within 12 months of the third warning.

More than half (35) of these companies also claimed furlough support from the government in December, and one third (21) are also claiming at least one other form of government support, such as CBILS.

The analysis showed that amid the uncertainty of the first half of 2020, 42% of FTSE 350 companies withdrew their earnings forecasts.

Robert Barnard Head of Debt Recovery said.  “These worrying statistics show the extent the current challenging environment is having on all businesses large and small, with many in the SME field literally surviving day to day. One area which causes constant resource strain and worry is unpaid debt with many organisations furloughing staff whose role it was to chase unpaid invoices.  As a result, collecting outstanding debts efficiently is now more than ever key in the survival plan jigsaw long and short term.  Without a robust and efficient credit control and debt recovery process DSO (days sales outstanding) will quickly grow and to halt this escalation third party assistance is needed. The standard policy of being patient and lenient will not deliver results but a dedicated and experience legal debt recovery law firm will.

Lupton Fawcett Debt Solutions can help at least take this pressure and burden away leaving business leaders to concentrate on other key areas of survival mode such as customer and product growth with restrictions due to be lifted in the coming months.