A Look Back At Debt Collection In 2023

It’s a new year, and we’re all looking forward to 2024 with a lot of excitement and hope. 2023 was a challenging year for a lot of businesses, with the slow recovery from Covid-19, economic pressures, rising interest rates, costs spiralling out of control and slower demand from customers across the board. A lot of industries have faced big changes in the last 12 months, including debt collection. The overriding message for creditors is that right now you need to be even more diligent in chasing debt, as well as being aware of all the options available to you. With that in mind, here’s a look back at what 2023 brought the world of debt collection.

Intentional Late Payment Increases

Debtors facing financial difficulties can be split into two groups: those incapable of paying and those unwilling to do so. The former are, unfortunately, an unavoidable consequence of doing business. On the other hand, the ‘won’t pays’ present a different challenge. These individuals intentionally put off settling their debts, frequently exploiting their business relationships to keep hold of their funds for as long as possible.

With sustained pressures on both personal and business finances during 2023, the number of ‘won’t pays’ has increased. Fortunately, a good debt collection agency can deal with them effectively. Often, it’s simply the fact that a creditor has appointed a debt collection agency which is enough to convince the debtor that it’s time to pay up.

Clamp Downs On Late Payment Discussed

Late payment is a common symptom of economic downturn just like the one we’re going through now. But as many small business owners know, it’s something that happens all the time, and big corporations are often some of the worst culprits for it. That’s why in early 2023 the government began the Prompt Payment and Cash Flow Review. The final report of this review was published in November, and it set out a series of actions that the government intends to take to improve payment culture in the UK – including increasing the scope of the regulations. More action on this is yet to happen.

Pressures On The Construction Industry

A lot of industries were hit by the pandemic and economic challenges, but the construction industry was one of the most impacted. Higher material and labour costs came together with lower asset values and a lower demand for commercial and residential properties, which meant construction industry took a definitive hit. And while there has been some easing of cost pressures recently, the Bank of England has been clear that their interest rates are unlikely to come down, which means construction companies will continue to feel the squeeze. That’s why it’s so important for them to do everything they can to reduce the risk of late payment of debt default.

Higher Rates Of Insolvencies In 2023

In Q2 of 2023, the government issued their company insolvency statistics, which were a little worrying. They showed a 13% year-on-year increase in insolvencies, prompting many business owners to evaluate their resilience. By Q3, the worries had increased, with 10% more businesses becoming insolvent than in Q3 the previous year. In fact, the last two quarters have seen the highest quarterly insolvency numbers since Q2 2009 and the highest number of creditors’ voluntary liquidations (CVLs) since records began in 1960.

Rise In CCJs

On top of all of that, 2023 saw an increase in the number of County Court Judgments (CCJs) being issued. In fact, the figures for April to June on CCJs issued for business debts showed a 12% year-on-year rise in CCJs. In the following quarter, there was a 15% increase compared to the same quarter in 2022. It’s the highest number of CCJs we’ve seen, and we hope that it doesn’t continue.

In such a tough economic climate, just getting paid what you’re owed can be incredibly difficult. With so many businesses experiencing financial difficulties, the number of late and delayed payments soared in 2023, which in turn put more pressure on businesses like yours. If they’re unable to pay at all, then you take a big hit to your bottom line. If you’re struggling to chase overdue debt effectively, then using a debt collection agency could be a good option for you.

At Debtcol, we specialise in helping business owners recover money they are owed. We achieved some great results in 2023, and we use our expertise and persistence to get results, all while acting with integrity and sensitivity on behalf of our clients. If you think working with Debtcol could improve your debt collection capability and help your business grow stronger, just get in touch with one of our advisors today.