Why should I accept a Company Voluntary Agreement?
by Rory Traynor
Red Flag Alert recorded 540 insolvencies in the fourth week of 2024. The ripple effect has left over 2,000 businesses affected by bad debt, leaving them vulnerable to further instability.
Once an organisation has experienced bad debt, it is three times more likely to become insolvent within the following 12 months. Following this trajectory, this could indicate the original 540 insolvencies could lead to a further 7,400 should their creditors suffer the same fate.
With insolvencies expected to increase in 2024 to around 7,000 per quarter, for any business with debtors, these figures are shocking and deeply concerning.
Impacts of Bad Debt on Creditors and the Broader Business Ecosystem
Insolvency poses significant challenges for creditors in the UK business landscape. When a debtor becomes insolvent, creditors may face substantial financial losses, jeopardising their ability to recover outstanding debts.
In such cases, creditors often receive only a fraction of the owed amount, as insolvency proceedings prioritise the repayment hierarchy defined by law.
Secured creditors, such as banks with collateral, are typically prioritised over unsecured creditors, the latter unlikely to secure their money. The process of pursuing outstanding debts becomes more complex and time-consuming during insolvency, impacting the liquidity and financial stability of the affected creditors.
Assessing the bigger picture highlights how insolvency not only hinders the financial stability and overall health of the defaulting business but also inflicts considerable economic repercussions on creditors, influencing their operational capacity and potentially triggering a ripple effect across the broader business ecosystem.
Red Flag Alert's Comprehensive Insights to Protect Businesses Against Bad Debt
Approximately 15,000 businesses face insolvency each year, and the risk of unpaid invoices and bad debts looms large, averaging £205,000 per insolvent company.
Red Flag Alert's suite of tools is a crucial safeguard for businesses, offering accurate financial health ratings that effectively predict insolvency risks.
This predictive capability enables businesses to proactively monitor the financial well-being of both current and potential clients and suppliers, allowing for timely intervention should the risk level of a customer escalate.
Red Flag Alert’s industry-leading database has over 100 data points for every UK company, alongside real-time updates, ensuring that risk predictions are not only comprehensive but as immediate as possible.
Businesses utilising Red Flag Alert benefit from a range of features, including monitoring alerts that keep them promptly informed of changes in their clients' risk profiles. The CRM integration capabilities extend to leading CRMs such as Hubspot, Zoho, Dynamics, ensuring seamless adoption into existing business processes.
Stay Ahead of Incoming Insolvencies with Red Flag Alert’s Automated Monitoring
It’s one thing to score a business on its insolvency likelihood, but monitoring the ongoing changes within these scores is a huge, yet essential part of risk mitigation efforts.
Optimise team efficiencies and automate monitoring tasks with Red Flag Alert. Our portfolio management tool’s capability is designed to meet the specific needs of sales and risk teams, offering a faster and more reliable way to access crucial information, with seven key features:
- Group Companies
Easily organise your monitoring process by creating separate, specific monitoring porfolios.
- Export Portfolio Data
Easily export bespoke portfolio data for documentation and further analysis.
- Share alerts
Choose team members to be alerted when there are changes in a portfolio's data so time-sensitive alerts aren’t missed.
- Unique Data and Support
Red Flag Alert offers a unique advantage with the ability to upload manual lists of prospects to the portfolio.
- Effective Monitoring with Customisable Alerts
This feature addresses alert overload by enabling customisable lists, ensuring that only crucial alerts are sent, enhancing efficiency, and allowing staff to focus on high-priority events.
- Domestic and international monitoring
Our database includes very UK business and over 350 million international companies, and lets you monitor each one. So you ca do safer and smarter business across the entire globe.
- Customised Dashboards for Efficiency
The portfolio management tool allows users to create customised dashboards that display only the necessary data on the companies deemed important. This tailored approach saves time and streamlines operations, making businesses more efficient.
Take charge of your business with precision and confidence Red Flag Alert's comprehensive prospecting and monitoring tools, and implement a robust solution for identifying dependable partners, clients, and suppliers, and monitoring their ongoing health.
Get your free trial now to experience firsthand how Red Flag Alert can help your business save time, money, and valuable resources.
