An analysis of the most pressing concerns based on insights from 1,000 UK business leaders.
Author: Colin Cunningham
As challenging economic conditions prevail, business insolvencies remain high across many sectors. Most recently, a multi-billion turnover construction contractor in the UK has gone into administration. As with similar events before them, shockwaves will be felt across the industry as the supply chain becomes impacted by unpaid debts.
In other industries, a long-standing US-based manufacturer recently filed for bankruptcy demonstrating the vulnerability across sectors and businesses of any size.
Whilst the number of insolvencies in the UK is beginning to level-off following the post-pandemic increases, they are still rising with 2024 seeing an increase of 3.9% compared to 20231.
Protecting your business
The domino effect occurs when the insolvency of one company raises the likelihood of other related companies, such as suppliers, debtors, and customers, to experience cash flow difficulties due to unpaid debts from the initial insolvency. This effect can be felt throughout the supply chain and take place over many years.
It’s more important than ever for businesses to consider the question; “could your business survive the event of non-payment on a significant invoice?” and in doing so, protect against the potential ‘domino effect’ of late payments and customer insolvency.
Trade credit insurance can be an effective solution to protect your business against a debt from customers failing to pay for goods or services provided to them on a credit basis, which often happens in an insolvency situation.
Trade credit insurance can also be used tactically to facilitate business growth into new markets and with new customers and suppliers. You may be able to offer higher credit limits to customers and give your own suppliers more confidence in your business because it is less likely for you to default on a payment to them as a result of cash flow problems caused by the knock-on effect of non-payment to you.
How Gallagher can help
Gallagher’s Trade Credit team can help you determine an appropriate credit insurance solution for your business. Solutions can be comprehensive covering whole turnover or more specific, focusing on key accounts, customers or invoices.
Please get in touch to speak to one of our team of specialists who can provide:
- A risk insight health-check of your top 10 debtors/customers
- Advice on credit risk mitigation strategies
