Is the risk of insolvency increasing?

Personal-Insolvency-services-northampton-milton-keynes

This morning (31 October) the BBC reported, “The number of firms in “Critical financial distress” jumped by 25% in the last three months.”  Indeed, the number of companies falling under this description was almost 38,000 and is based upon a report that county court judgments (“CCJ”) exceeding £5,000 have increased significantly.

Firstly, some perspective.  There are over 5 million businesses registered in the United Kingdom.  However, that is small consolation if you are one of the 38,000 (or close to becoming one of that number).

A CCJ can be damaging to a business as it effects credit ratings, can impact on the ability to obtain supplies and, sometimes, can be a precursor to corporate failure.  However, you may get a CCJ for several reasons, including:

  • You have lost a legal claim, so judgment was made against you; or
  • There had been an innocent oversight; or
  • You have cash flow issues where you are unable to pay debts as they fall due.

Losing a legal claim can have obvious and direct consequences that may even result in the demise of your business.  However, cash flow issues can be something that creeps up on a business – sales may take a slight dip, that invoice you were expecting to be paid is delayed, or simply not paid at all.  A common issue we are seeing frequently is costs of materials have increased, resulting in a reduced profit margin on a job you are contractually bound to complete.  In business, you can be so focussed in doing the business that you take an eye off the business itself and these operational issues do not get recognised as early as they might.

Just because a company is struggling, it does not automatically mean failure.  As PBC have demonstrated time and again, taking early advice has enabled us to consider the options available and it enhances the prospect of turning your fortunes around.  It should be said that it is rarely too late to take advice.  However, the longer you leave it until you do, generally narrows the options available.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Why it’s important to check your credit report

Why it’s important to check your credit fileRecent research revealed that more than 2000 county court judgements (CCJs) are made every day, often without the knowledge of the individuals and families receiving them.

A CCJ is made when someone takes court action against an individual, saying they owe them money, and the individual doesn’t respond. These orders play a key part in debt recovery for businesses. However, they can adversely affect the credit rating of individuals if they never receive it, perhaps due to a recent house move and the letter being sent to an old address, and are therefore unable to either dispute it or pay it.

As CCJs stay on an individual’s credit file for six years, the fact that it exists at all may only come to light later down the line when a mortgage or similar is applied for and refused.

A credit file is a financial record of every borrower in the UK, showing their repayment behaviour over a six-year period and, with CCJs hitting the headlines, it seems timely to take a look at some of the key reasons why you should review it regularly.

Get an overview of your outstanding credit

Seeing all your current financial commitments that require credit, such as mortgages, credit cards, loans and mobile phone contracts, in once place can help with the management of your personal finances.

Apply for the type of credit that is right for you

Lenders calculate their credit scores on different criteria, so while one may reject you, another may accept your application for credit.

Identify ways to improve your credit score

There are several steps you can take to improve your score including closing any credit cards you no longer use, ensuring you are on the electoral roll and making any necessary repayments on time. Also noted on your credit file will be details of any defaults on loans or CCJs.

Protect yourself against identity fraud

A look through your file will enable you to detect any names you don’t recognise or accounts that aren’t yours. If you find any, it could mean you are a victim of identity theft.

Spot any mistakes and ensure they are corrected

This includes making sure your address details are current and removing any financial connections to people who are no longer relevant, such as previous partners who you may have held a joint account with. Errors should be reported to the credit reference agencies as well as the company responsible.

You can check your credit file as often as you like without it impacting on your credit rating and it’s well worth the time to ensure it is accurate and as good as it can be so you are in the best position when seeking credit at a future date.

Companies such as https://www.clearscore.com/,  http://www.experian.co.uk/ and www.creditreport.co.uk offer free and monthly paid for packages that allow you to keep track of your credit report and score.