Senior Debt Recovery specialist Aaron Sambells discusses the UK’s debt situation and the impact it can have on businesses.
Debt is not a word we like to hear as individuals; whether it is owed to us, or we owe money to another. But statistics show that £1.669 trillion is owed by individuals in the UK (November 2019). While some of this will be the normal and expected debt such as mortgages, much of it will be personal debt owed for services or products.
For every adult in the UK, the average debt stood at £31,643 in January 2020, which is more than the average UK salary of £29,009. The knock-on effect is that around 336 people are declared bankrupt every day in the UK (July to September 2019).
As well as the financial impact of debt, there are social implications, and in 2019, Citizens Advice dealt with 2,616 new debt problems each day. And now, with the impact of the Covid-19 pandemic, the fallout from a national lockdown and many businesses finding themselves in financial difficulties, debt is likely to become more of a problem than ever before.
For the businesses and individuals that we support, products or services have been provided, but payment for them is not forthcoming. In turn, this means that their own cash flow becomes an issue, their own debts mount up, and often, businesses end up in financial turmoil of their own if too much debt starts to mount up.
More and more clients are reaching out to us to help resolve and claim unpaid debts. Sometimes it’s a large sum of thousands of pounds, and other times its 20 smaller debts of £50. By using our team, the stigma around chasing those payments is removed, and the debtor knows that the debt collection process has stepped up a notch and must now be taken seriously.
Often, we are able to negotiate repayment terms without having to escalate the issue further, so payments are received over a period of time until the debt is fully repaid. This can help to ensure relationships are maintained for the best interests of everybody.
While debt may continue to be a word we don’t wish to hear, our team can make it a word that doesn’t stick around for long!
Statistics were sourced from Finder.com/debt-statistics and from the Office for National Statistics (ONS).