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|Bad business debts exceed £4 billion|
|Wednesday, 27 April 2016|
New analysis conducted by Creditsafe, the world’s most used provider of online company credit reports, reveals the total value of bad debt left to companies after a firm was liquidated in 2015 stood at a cumulative £4,236,542,210.
On a more positive note, the number of bad business debts left to companies after a firm is liquidated fell 9% last year. The volume of these bad debts has fallen by a quarter since 2013, from a peak of 55,369 down to 41,328 last year. As the number of company closures has declined in the last three years there has been a corresponding decline in the number of bad debts left for businesses after a firm has been finally liquidated.
Businesses located in Greater London have faced the greatest volume of exposure to bad business debts in the last three years, but the number has fallen by more than a third in the last two years. Last year businesses recorded 6,538 bad debts left to them when a company had entered liquidation, down from 9,904 in 2013.
One area of concern for the Chancellor will be the North West, the only UK region where the volume of bad debts left to companies after a firm is liquidated increased last year. While the volume has fallen since 2013 the rate of decline is lower than other regions. Bad debts left for businesses after a company has been finally liquidated increased by 2% in the North West of England last year.
Scotland has witnessed the largest decline in the volume of bad business debts in the last three years, with incidences of unrecoverable monies falling by 36%, from 1,139 in 2013 to 733 in 2015.
Rachel Mainwaring, Operations Director, Creditsafe UK said: “The reduction in volume of bad business debt in the last three years as a result of companies entering liquidation is good news for UK plc. However, the volume of bad business debt is still far too high and emphasises how companies can be hugely exposed in the multi-billion pound trade credit market.
Companies can help reduce their exposure to bad debt by taking advantage of business intelligence services to establish the likelihood of a trading partner or supplier becoming insolvent. The services can also be utilised to identify the payment practices of businesses to establish the likelihood of being paid promptly.”
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