There were 1769 company insolvencies registered for January 2024, reported by the Insolvency Service. 

Made up by:

339 compulsory liquidations

1294 creditors voluntary liquidations

120 administrations 

16 CVA’s

Compared to January 2023, there has been a 5% increase in company insolvencies in January 2024.

A proactive approach to credit management will help to support businesses through what is expected to be a difficult first quarter of 2024. 

Understanding what credit management information, tools and services are available to your business will help you to achieve your business financial goals.

Amidst the news that the UK has officially entered recession, businesses are seeking ways to minimise debt and maximise cash flow. 

The economy shrunk by a larger than expected 0.3% between October and December, after it had already contracted between July and September. The UK is in recession if it fails to grow for two successive quarters.

A proactive approach to credit management can support you and your business in achieving these goals.

We are working with thousands of construction businesses, supporting them to secure a successful future.

Communities in the London boroughs of Newham and Southwark are to benefit from the acceleration of thousands of new homes, across three major brownfield regeneration projects, through a pioneering partnership.

Reflecting the strong need in London for affordable homes, 40 per cent of the new homes on two of the sites, which have planning permission, are to be genuinely affordable for local people. The first homes should be ready in 2027 alongside retail and leisure facilities.

The three projects are:

• Twelvetrees Park, Newham. The 26-acre site is being transformed into a mixed-use neighbourhood including close to 4,000 homes, of which 40 per cent will be affordable, a secondary school, park, playground and 177,000 square feet of commercial space. The funding will support the second of four phases to regenerate the former depot and coach park.
• Bermondsey Place, Southwark. Nearly 1,400 homes, 40 per cent of which will be affordable, created across a 5.4-acre former light industrial site, alongside a network of public parks, playgrounds, commercial spaces, footpaths and a one-acre civic square. Funding will bring together several parcels of owned land to ignite progress.
• Beckton Riverside, Newham. Up to 2,800 private and affordable homes, subject to planning consents, will be created under the first phase of delivery across a larger site of 28 acres. Following planning consent, the funding will expedite vital infrastructure works on the former gasworks.

Read More here: https://www.gov.uk/government/news/major-regeneration-investment-to-accelerate-8000-new-homes-in-newham-and-southwark?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=e382ed9a-e608-4980-b28e-e949420a05b8&utm_content=daily

All major housing developments are now required to deliver at least a 10% benefit for nature with England becoming the first country in the world to make Biodiversity Net Gain a legal requirement.

Biodiversity Net Gain (BNG) will apply to applications for major developments only and will be implemented for small sites (between 1 and 9 dwellings) from 2 April 2024. Roll-out of BNG for Nationally Significant Infrastructure Projects is expected in late 2025.

How Biodiversity Net Gain Works  

• Biodiversity Net Gain (BNG) will apply to new planning applications, rather than existing applications.   
• BNG is measured in biodiversity units calculated through the statutory metric tool. This calculates how many units a habitat contains before development, to then calculate how many biodiversity units are needed to provide at least 10% BNG. 
• The statutory biodiversity metric considers the size, quality, location, and type of habitat. 
• BNG can be achieved through on-site units, off-site units, or through statutory biodiversity credits. These credits will be available as a last resort from the government, to prevent delays in the planning system. 
• It is also important that BNG provides lasting benefits for the environment. That is why we have set out how the improved significant on-site and off-site habitats will be managed for the long term. Significant on-site and all off-site gains will need a legal agreement with a responsible body or local authority to monitor the habitat improvements over the 30-year period. 
• Natural England has also created a Habitat Management and Monitoring Plan template to support management. 

Read More Here: https://www.gov.uk/government/news/new-housing-developments-to-deliver-nature-boost-in-landmark-move?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=1e0d45ae-dc4e-47fe-bb95-5b6fc604e085&utm_content=daily

Companies House is aiming to introduce the first set of measures under the Economic Crime and Corporate Transparency Act on 4 March 2024.

The Economic Crime & Corporate Transparency Act gives Companies House the power to play a more significant role in disrupting economic crime and supporting economic growth.

What will change?

The first set of changes introduced by the Economic Crime and Corporate Transparency Act includes:

1. Greater powers to query information and request supporting evidence.

2. Stronger checks on company names.

3. New rules for registered office addresses.

4. A requirement for all companies to supply a registered email address.

5. A requirement for all companies to confirm they’re forming the company for a lawful purpose when they incorporate, and to confirm its intended future activities will be lawful on their confirmation statement.

6. The ability to annotate the register when information appears confusing or misleading.

7. Taking steps to clean up the register, using data matching to identify and remove inaccurate information.

8. Sharing data with other government departments and law enforcement agencies.

Emma Reilly FCICM, CEO at Top Service Ltd commented “The construction industry is facing an ongoing battle with identifying potential fraudulent activity, particularly when opening trade credit accounts. The changes being introduced in March are welcomed in both the construction industry & credit management industry overall. This overhaul is well overdue in my opinion & I look forward to further clarification about the future planned changes including Director ID verification checks”.

We have confirmed that Readie Construction Ltd entered Administration

Readie focused on projects that valued between £5m – £100m, primarily in the industrial and commercial sectors. The company has been running for 16 years and according to the last accounts for the trading year ending 31st March 2023 had a pre-tax profit of £ 1.73 million & turned over £421 million. According to the accounts, the business transferred ownership to an EOT (Employee Ownership Trust) in March 2021.

Over the past 11 months, we have sent 9 early warnings to our Top Service members regarding potential cash flow issues. These warnings are based on our trading experiences, which are exclusively available to our Top Service members. Our specialism in the construction industry is what sets us apart from traditional credit reference agencies. Our information enables our members to make the most informed credit decisions.

In 2023, UK corporate insolvencies reached a staggering total of 25,159. Among these, the construction industry bore a significant brunt, accounting for just over 15% of the total insolvencies. 

For construction businesses, navigating through uncertain economic times demands a proactive approach to financial management. Throughout 2023 the construction industry suffered over 10 insolvencies per day & the need for robust debt recovery strategies and risk management solutions have become increasingly paramount.

On a brighter note, the increased levels of insolvency seem to be also having a positive impact on the credit management industry. There is increased awareness of robust, efficient & effective credit management practices. Recognition for those working within credit management has increased & the construction industry in particular is becoming more aware of the most up to date & relevant information available to them. 

At Top Service, our goal is to support you and your business by reducing your exposure to bad debt. We achieve this by offering early alerts for potential cash flow challenges encountered by construction businesses, while also delivering highly effective debt recovery solutions aimed at enhancing cash flow.

How CICM is partnering with Top Service to advance the credit profession in the construction sector.

We are excited to announce a new Corporate Partner.

We are thrilled to announce that Top Service Ltd has taken a significant leap forward by becoming a proud corporate partner of the Chartered Institute of Credit Management (CICM). As the exclusive provider of credit reference information and debt recovery services tailored for the construction industry, Top Service brings over 30 years of credit management expertise to the table. This strategic partnership marks an exciting development that promises to benefit CICM members and the broader construction community.

Top Service Ltd: A Credit Management Powerhouse:

With a rich legacy spanning three decades, Top Service Ltd has established itself as a credit management powerhouse. Specialising in providing credit reference information and debt recovery services exclusively for the construction sector, Top Service brings unparalleled expertise to the table. The company’s commitment to excellence and its extensive network within the industry make it a natural fit for the CICM’s mission to empower credit management professionals.

 A Personal Perspective:

As a longstanding member of the CICM, I have personally experienced the immense value that this community provides to credit management professionals. The tools, resources, and collaborative spirit of the CICM have been instrumental in shaping the success of individuals in the field. Now, as a representative of Top Service Ltd, it is an honour to join the CICM as a corporate member and contribute our support to this vibrant community. – Emma Reilly, CEO

 Top Service’s Commitment to the CICM Membership:

Top Service is uniquely positioned to support CICM members by offering access to the latest credit information and debt recovery services tailored specifically for the construction industry. With approximately 6,000 branches and depots spanning various sectors within construction, Top Service’s reach is extensive. This strategic partnership is not just a collaboration; it’s a commitment to providing CICM members with the tools and insights needed to confidently assess credit risk and make informed decisions.

Looking Ahead:

As we embark on this exciting journey with the CICM, we anticipate that the partnership with Top Service Ltd will be a game-changer for credit management in the construction industry. Members can expect a wealth of resources, expert advice, and support to navigate the complexities of credit management effectively.Stay tuned for updates on the upcoming resources and initiatives that will further enhance the value of CICM membership. Together, we are poised to elevate credit management standards within the construction sector, empowering professionals to make the best, most informed credit decisions. As we join forces, we invite CICM members to be a part of this transformative journey and look forward to collectively shaping the future of credit management.

Insolvency statistics for November 2023 were released on the 15th December 2023 by the Insolvency Service. A further increase of 149 cases in November, signifies a 6% increase in insolvency when comparing November to October 2023. Below we break down the figures into a Year and Year and Month by Month comparison. 

Registered Company Insolvencies 

Breakdown:

In November, 2466 company insolvencies occurred, with the majority of the cases attributed to Creditors Voluntary Liquidations (CVL’s) with 1962 cases. Furthermore, there were 359 Compulsory Liquidations, 133 Administrations and 12 Company Voluntary Arrangements (CVA’s). 

Year on Year Comparison:

A 21% increase in insolvency can be observed when comparing November 2023 with the same month the previous year. November 2023 saw an additional 434 insolvency cases in comparison to November 2022 consisting almost entirely of 369 cases of Creditors Voluntary Liquidation and 64 cases of Compulsory Liquidation. 

There has been a steady increase in the number of Compulsory Liquidations since April 2023, however the number of Compulsory Liquidations has reached the highest level since possibly prior to 2019. A 22% increase is also notable in the number of Compulsory Liquidations in comparison to November 2022. Creditors Voluntary Liquidations also remain at an elevated level and are the highest they have been since May 2023 with a significant 23% increase in November compared to the same month in 2022.  

The industry specific insolvency statistics for the construction industry in November will be released next month, however for the month of October, 375 insolvency cases were registered. In comparison to October 2022, this is an increase of 27 cases. 

To break this down further, 210 cases affected companies within the Specialised Construction Activities sector and a further 151 cases were registered for companies falling into the Construction of Buildings sector of which, to be more specific, 86 insolvency cases can be attributed to the Construction of Residential and Non-Residential sector. 

A Month on Month View:

Compulsory Liquidations and Creditors Voluntary Liquidations appear to be the contributing factors in the 6% increase in insolvency for November. There was an increase of 99 cases in Compulsory Liquidations and an increase of 75 cases in Creditors Voluntary Liquidations. The only decrease in insolvency method can be found in Administrations which decreased by just 13 cases in comparison to October 2023. 

The Development of Building Projects sector in combination with the Construction of Residential and Non-Residential Buildings sector are the driving force behind the 11% insolvency increase for the construction industry when comparing September 2023 and October 2023. The Development of Building Projects sector saw an increase of 16 cases and the Construction of Residential and Non-Residential Buildings sector noted an increase of 17 cases. 

Concluding Remarks 

It is evident that insolvency rates continue to climb for the majority of industries and the construction industry is no exception. As we delve deeper into the festive month, activity in the construction industry is likely to slow down and this may also have an impact on both cash flow and insolvency rates. 

Due diligence and keeping track of your key suppliers and clients could not be more vital to mitigate the risk of a bad debt. Now may also be the right time to review your current credit control practices and methods ahead of the new year when new activity and demand within the industry may start to rise. 

When do you start your credit control process? Upon an overdue balance or earlier? Starting your credit control process as soon as you are approached by a potential new customer for a credit account can save you time, money, reduce the risk of bad debts and keep trading relationships healthy. 

Below we reveal our top 10 credit control Tips to ensure an effective credit control process. 

1. Credit Control Guidelines & Policies. 

Establish credit control guidelines to efficiently handle overdue balances. 

A credit policy provides a framework for managing credit related processes, sets clear expectations and promotes efficient communication within a construction business. 

By implementing and adhering to a credit policy, businesses can mitigate financial risks, improve cash flow and support sustainable growth.

A credit policy should also determine how often you’ll contact the customer and when & how as well as the duration of time before passing the overdue balance to a third party for collection. 

2. Credit Application Forms. 

A good credit application form will assist you in your due diligence as well as recovery. Information is key and a completed credit application form can give you all the necessary information to help you decide whether to extend your credit facilities to this new customer. They can also assist you in understanding what your customer needs from you in order to make payment, for example, do they need purchase orders? Knowing exactly who you are dealing with and avoiding any miscommunication can also prevent any disputed balances. You can download a template credit application, designed and supplied by Top Service Ltd here: /factsheets/credit-application-form-guidance.pdf

3. Credit Reference Agencies. 

Credit reference agencies can also assist you in deciding whether or not to extend credit facilities to a potential customer by first providing a credit limit and score. The right credit information provider for your business should be knowledgeable about your industry. They should be providing you with information to support your business and keeping you up to date with changes to the financial status of your customer, that may result in a risk to your business. These early warnings will help to minimise your exposure to bad debt.. 

4. Account Management.

Checking in on your customers to make sure there are no queries or whether they received their invoice can be greatly appreciated and have a positive impact on your DSO and trading relationship. 

5. Keeping Track 

Keeping track of financial changes with your customer and even your customer’s customer is the best way to minimise your exposure to bad debt. Understanding when financial changes happen and why will help you to react quickly and minimise your exposure to bad debt. A good credit reference agency should have a service to support you with this. 

6. Creating Boundaries. 

Building great trading relationships is crucial for any business, however, it’s just as important to understand when your customer is using your goodwill as a delay tactic on an overdue balance.

7. Start Your Collections Process Sooner. 

Reacting quickly to an overdue balance can be vital, with insolvency rates increasing, leaving your overdue balance for an extended period of time can result in a bad debt. Contact details can also change in that time frame and you may be unable to contact your customer. 

8. Observe and Act On Anomalies. 

Have you heard rumours or is your customer unusually paying later than normal? These can be signs of a company that’s struggling to manage its cash flow. Reducing your credit limit, understanding how the company is paying other suppliers and beginning your collection process sooner, may reduce the risk of a bad debt.

9. Is Your Invoice Working For You?

Does your invoice have all the information needed for your customer to make payment? Ensuring that payment terms, bank details and contact information are on your invoice can mean that should a query arise then it can be dealt with efficiently. 

10. Regularly Review Credit Control Processes. 

As your company grows and develops, your credit control processes need to develop too. If you have noticed an increase in bad debts, is there something that can be changed within your due diligence? Are you reacting to the information received?

Our Head of Operations, Laura Humphries gives her take on how to minimise debt & maximise cash.