THE 'BAck to business' guide

BAD DEBT

FROM THE UK'S LARGEST INDEPENDENT INVOICE FINANCE SPECIALISTS

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PROTECT YOUR BUSINESS FROM BAD DEBT

What's the issue?

Bad debt is a serious issue affecting a large number of businesses in the UK and according to R3, the insolvency industry trade body, more than 100,000 British businesses are owed an estimated £16 billion by insolvent companies. 

In some shape or form, bad debt is a problem that affects businesses, irrespective of size or sector. However, the issue is particularly problematic for smaller firms who have often footed the bill for upfront costs – many of which don’t have sufficient cashflow to survive. Bad debt can occur for a number of reasons including customer insolvency or protected default and all too often business owners don’t have financial resources or access to advice to pursue legal action.

  • 63% of businesses have written off over £10k due to bad debt in Q3
  • 39% of UK businesses said they need support with cashflow

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BD Guide

How to protect your business from the effects of bad debt

Findings of our latest SME Confidence Tracker show that over a quarter of small businesses are affected by bad debt today. But what’s most important for businesses who survive the effects of bad debt is the action they take in the aftermath to prevent it from happening again.

Research shows that one in three SMEs (30%) of small businesses have been affected by bad debt, up from 27% in Q2 2016. The average amount written off as bad debt in the past 12 months has increased to £12,655.96, up from £11,829.74 in Q2 2016. Here are a few steps you can take to offset the risk of bad debt for your business.

Find out more at www.bibbyfinancialservices.com/bdp

The following considerations will help you adjust to the new rules and prepare your business for future changes.

Number 1

EFFECTIVE CREDIT CONTROL

Due diligence and effective credit control are paramount to understanding your customers and ongoing monitoring can help you to identify potential signs of bad debt before the problem arises. 

Number 2

DIVERSIFY YOUR CUSTOMER BASE

Although easier said than done in an increasingly competitive environment, ensuring that you have a good spread of customers is the best way of reducing your exposure to bad debt. You should review your concentration (the revenue generated by your single biggest customer) and take appropriate action to ensure that you can diversify your customer-base. 

Number 3

CONSIDER BAD DEBT PROTECTION

Another way to insulate your business against this risk is to seek out bad debt protection to ensure you will still be paid if one or more of your customers becomes insolvent or unable to pay moneys owed. Many independent financiers can offer bad debt protection as part of a business’s funding agreement and many also provide credit control and sales ledger management to help business customers identify potential issues before they become a problem. 

ABOUT BIBBY FINANCIAL SERVICES

Bibby Financial Services is the UK’s largest Independent Invoice finance specialist and a trusted provider of funding solutions to over 7,000 businesses.

Through our network of 19 local offices, we handle annual client turnover of £5 billion and since 2010, we have advanced more than £26bn to small and medium sized businesses throughout the country. 

Formed in 1982, we are a member of the Asset Based Finance Association (ABFA) and support businesses in over 300 industry sectors.

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Globally, we have operations in 44 locations, in 14 countries across Europe, North America and Asia, supporting more than 9,500 business customers worldwide.

In 2011, 2012, 2014, 2015 and 2016 the company was awarded a place in the Sunday Times 100 Best Companies to Work For, ranking 31st in the most recent poll.

We are supported by our parent company, the 208 year-old Bibby Line Group, a business-to-business services group involved in logistics, shipping and ship management, floating accommodation, hydrographic survey and geophysical services, offshore project management, retail, woodland burials and construction equipment hire. 

The company was founded by Liverpool entrepreneur John Bibby in 1807 and has its head office in Duke Street, Liverpool.

OUR PRODUCTS AND SERVICES

We help businesses unlock working capital for a range of scenarios, including cashflow funding, new equipment purchase, growth and expansion, management buy ins and buy outs, refinancing, corporate restructuring and mergers and acquisitions.

Our range of financing options includes:

  • Invoice Finance
  • Factoring
  • Lease Finance
  • Export Finance
  • Trade Finance
  • Specialist finance for the construction and recruitment sectors
  • Foreign Exchange