- 28 Feb
Maplin Electronics & Toys R Us Enter Administration
Two more large company failures on the BBC news this morning - both Maplin Electronics and Toys R Us have entered Administration.
Maplin Electronics & Toys R Us Enter Administration
Administration is an insolvency process whereby a firm of insolvency practitioners, the Administrators, take over the running of an insolvent business (one that cannot pay its creditors as they fall due), in order to maximise the returns for creditors of the business. An Administrator may choose to move the company into liquidation, or they may trade some aspect of it forward, for example, to maximise returns for the creditors. Seeking sale of the business may also be within the remit of the insolvency practitioners handling the case.
So these are two more large, well known names entering insolvency procedures, from the retail arena. These may be two more instances of small suppliers facing potential losses, as a result of large companies, that are their customers, failing.
Carillion Bad Debt Protection
These failures, although from different sectors, follow my recent comments about Carillion and how some of their suppliers have need additional support in order to survive the loss of business and possibly income from outstanding invoices. We also reported how some customers, that had the foresight to use bad debt protection products as part of funding packages have avoided the financial impact of any losses. The example of Carillion related to the construction sector, but these protections are equally applicable to all industry sectors - and could have included protecting you against losses associated with the failure of Maplins and Toys R Us.
Again, these failures highlight the risks in dealing with debtors who are even large, well known names. Having worked within the factoring industry for many years (including time as a Credit Underwriting Manager), I have come across numerous businesses who don't run any credit checks for new customers that are "well known names". Unless you take an active interest in the financial shape of these large companies, you may not have been aware that these failures were looming. Indeed, the Carillion example taught us that relatively recent accounts showing profitable trading are not even sufficient to ensure your safety when granting trade credit to customers. This is where the credit underwriters behind bad debt protection come into their own. They keep an eye of these types of issues and monitor for potential problems with customers, so that you don't have to. Even if they get it wrong, providing you trade within the credit limts that they set, you are covered in the event of a customer insolvency.
Time To Review Your Bad Debt Protection Status?
Now is the time to review your credit protection status, before the next unexpected customer failure. It might be another large, well known name or even a small company that you deal with that is likely to be even more sensitive to a downturn in trading or market conditions. Call Sean on 03330 113622 or contact us for a free discussion about bad debt protection.
- 02 Mar
Construction Sector Protection Against Insolvencies
Construction sector companies are urged to think about protecting their cash flow as recent news reports suggest that insolvencies in the sector have increased substantially.A recent report in CityAM (10th of February 2020), states that whilst the total number of insolvencies in the UK has risen by just under 5%, the situation within the building and construction sector, is that there has been an...
- 25 Nov
How To Credit Check A Customer
Granting credit to customers is often a leap of faith so conducting credit checks on a customer can give some element of comfort to the supplier. However, even the most well known, household names can fail.Recent experience with long established brands such as Thomas Cook, Mothercare and Debenhams (to name but a few that failed in 2019), shows that no one is immune to problems that can lead to...
- 01 Oct
Mitigating The Risks Of Selling To One Major Debtor
When you land a major customer it can provide a huge boost to your business, increasing sales turnover and generating profits. However, there is another side to dealing with a major debtor, and that is the increased risk associated with your trade being concentrated into one customer.In a previous post I covered the risks of selling to a single major customer, often called a "prime debtor". These...
- 23 Sep
You Can't Rely On A Name Like Thomas Cook
Another failure of a well known, long established company proves, yet again, that you can't rely on dealing with a "big name" to ensure that you get paid for services rendered, or products supplied. Sticking to "household names" is no longer enough to ensure that you avoid bad debts.The latest corporate failure, reported by the BBC today, was the holiday company Thomas Cook. After a 178 year...
- 06 Dec
Hospitality And Construction Sectors Top The Insolvency Index
Looking at some figures in Business Money, published from the Creditsafe Insolvency Index, it appears that the hospitality sector (hospitality, hotels, restaurants and bars) tops the insolvency index, followed by the construction sector and then manufacturing. Worrying if you supply those trades with goods or services.Figures from the Office For National Statistics suggest that generally, the...
- 30 Jul
The Risk Of Customer Bad Debts Is Rising
The risk of customer bad debts is rising as there has been an increase in both corporate and personal insolvencies. It is time to protect your business against the risk from customers taking trade credit. Protection against taking customer bad debts is still on offer at present.REQUEST DETAILS OF BAD DEBT PROTECTIONAn article in The Times dated 28th July 2018 reported that personal insolvencies...
- 24 Apr
Factoring For Road Transport Company Cash Flow Problems As Bad Debts Increase
Coincidently, just after posting my article about transportation factoring companies, I saw an article published online by the Motor Transport publication, suggesting that bad debts have risen significantly within the road transport sector.The article sites figures regarding the road transport sector, released by Credit Safe. This statistics show that in the first quarter of 2018, while sales...
- 23 Apr
Retailageddon - Why Are So Many High Profile Companies In Financial Trouble?
Can anyone explain why so many high profile companies are having financial problems? Is there cause to worry about economic stability?I first started really paying attention to the spate of emerging problems when Carillion collapsed, the second largest UK construction firm. Watching some of the social media commentators that have an interest in the credit insurance sector. Since then there seem...
- 26 Mar
Protection For Suppliers To UK Retail Chains
If you are a supplier to any of the large retail chains, you may wish to review your requirement for bad protection following a number of recent news reports from the retail sector.More problems have emerged from the sector as the BBC report that Prezzo, the Italian restaurant chain plan to close approximately a third of their retail outlets, as part of a creditors voluntary arrangement...
- 30 Jan
Pulse On Protecting Against Carillion Bad Debts
I had an email from Pulse Cashflow Finance, one of our funding panel, that I thought raised a great point about the recent failure of Carillion. Their clients will not be suffering any bad debts.They have included "bad debt protection" for all of their clients, including those operating within the construction sector, meaning that their clients are protected from taking a bad debt.OK, so it was...