How the cost-of-living crisis is impacting credit control

The escalating costs of essential goods and services, such as energy, groceries, and rent, have taken a toll on the spending power of individuals throughout the UK. Latest government data, for example, reveals that nearly one in four adults are resorting to borrowing more money or utilising additional credit to make ends meet. This situation has been further exacerbated by inflationary pressures and global uncertainties, intensifying the challenges faced by both individuals and businesses.

The repercussions of this crisis however extend beyond personal finance, as credit control departments grapple with significant obstacles. The mounting levels of debt amongst individuals, means there is a higher likelihood that smaller businesses, start-up enterprises, contractors & freelancers delaying bill payments and a tendency to prioritise certain bills while leaving others unpaid until the last possible moment. They may even struggle to pay existing debts promptly. Consequently, creditors face greater difficulties in recovering debts, a situation unlikely to improve in the short term.

The impact on your business reaches far beyond the mere necessity of spending additional time chasing after unpaid debts. It has the potential to disrupt investment plans and affect your own expenditure. Insufficient cash flow due to delayed payments or the need to allocate funds towards legal fees to escalate debt collection situations can impede your company's growth and stability.

To mitigate the risk of debts turning bad, it is essential to adhere to best practices in credit control procedures. Adopting a proactive approach by working closely with debtors and sending timely invoices, statements, and reminders is crucial. Identifying problematic accounts and intervening early in the debt recovery process significantly increases the likelihood of prompt settlement.

In such challenging times, finding the right candidates for Credit Control positions can prove invaluable in alleviating the pressure on your business. Skilled professionals with a deep understanding of credit control processes can navigate the complexities of debt recovery, ensuring smoother operations and mitigating the impact of the cost-of-living crisis on your business's financial health.

Contact us today for a confidential discussion about your hiring needs.