As the year draws to a close, UK businesses are facing a troubling trend: a sharp rise in unpaid debts.
Recent data shows a 127 per cent increase in bad debt among small and medium-sized enterprises (SMEs) over the past six months alone.
This surge highlights the growing need for businesses to address outstanding debts head-on to protect their cash flow and stability.
Bad debts, or uncollectible money owed by customers, can seriously strain a company’s finances, particularly in uncertain economic times.
Many SMEs are still grappling with pandemic-related setbacks, compounded by ongoing economic volatility and recent Budget uncertainties.
With the cost of living high, both individuals and businesses are prioritising essential expenses, meaning that payments to suppliers and contractors are often delayed or skipped altogether. For SMEs, which often lack the financial cushioning of larger corporations, rising bad debts can quickly snowball into severe cash flow issues.
Proactive measures to rein in bad debt
If bad debt is hitting your business, taking steps to address it now could help you avoid future cash flow challenges and reduce your risk of insolvency. Here are some key strategies to consider:
