The late payments battle, Businesses write off £8 in every £100

Late payments and written-off invoices can be the bane of business accounts. For every £100 a business makes £8 is written off. That means your business losses £8 per £100 client spend, we know if it were on that scale no one would give away £8 per £100. However, when you as a business write off one invoice, that has a knock-on effect that means over the total income you make; you then write off an amount per hundred pounds. We know that this could add up to a significant loss for your business. 

There are several factors that contribute to businesses writing off debt, including slow payment times from clients and uncollectable invoices. Additionally, some businesses may choose not to pursue unpaid invoices due to the costs involved in the repayment process. But let’s look into the figures in more detail.

UK businesses writing off debt: The numbers. 

There are many businesses that write off debts to make life easier. It can seem like a simple option. However, 1827 businesses registered for insolvency in July 2022. This was 67% higher than the same month in previous years, 1096 in 2021. 

In the same month July 2022, 1,835 Debt Relief Orders (DROs) were issued which was similar to the same month last year. However, it was 23% lower than pre-pandemic figures.  

Facts and figures have been sources on the ONS website, click here for more details.

How writing off debts impacts your business and the economy 

While it can be tempting to simply write off the debt as a business, there are steps that you can take to improve your cash flow and reduce write-off costs. For example, you can take proactive measures to ensure that your invoices get paid on time, or explore options like factoring or invoice discounting to help manage your cash flow. Additionally, you could work with a collection agency to pursue unpaid debts more aggressively. 

Whatever your approach, it’s important to carefully consider the potential impact of writing off debt on your business and the wider economy, as well as your options for tackling this issue head-on. After all, the long-term health of your business may depend on it. 

Writing off debt becomes a vicious circle. When a business writes off the debt, money isn’t just deleted. It has to be found from somewhere else, this is typically your own bottom line. When you continue to write off debts, you lose more and more income. This results in your own issues in paying invoices and expenses. This means there is less money circulating as you have to create cuts; cuts result in fewer profits that are taxed and also ends in job losses which again can’t be taxed. The cycle begins again. 

Money needs to flow continuously in one way and then out another. When it gets cut off at one point, in this case writing off debts, it can’t continue to move around. This creates pressure on your business and results in catastrophic issues with the economy. 

What are your options to explore before writing off debt?

There are many options you can explore before you write off the debt entirely. As a business you can always look at your own income and whether you will be able to work out payment plans. Alternatively, you might find it easier to contact a Debt recovery company such as My Debt recovery. Here we work with you to find appropriate solutions that work for you and your clients. 

Debt and money talks can be complex topics to approach even for business. Having an agency like My Debt Recovery which can help guide you through the debt recovery process can be a lifeline for many business owners. Contact our team of experts now to see how we can help you collect any unpaid debts or invoices.