With Government bans on key debt enforcement actions due to run out at the end of this month, East Midlands businesses should seize the initiative and start conversations with their creditors over arrears built up during the pandemic.
This is according to the Midlands branch of insolvency and restructuring trade body R3, which is expressing concerns that any rush by creditors to recover what they are owed too quickly might force the companies which owe them money out of business.
R3 Midlands Chair Eddie Williams, a partner at PwC in the region, believes that constructive and honest conversations between groups such as suppliers and customers, and businesses and HMRC will be vital to businesses’ prospects of continuing to trade and to wider economic recovery.
He said: “Businesses have built up debt over the pandemic for very understandable reasons, so it will be important for them to have productive and frank discussions with those to whom they owe money about the best way to proceed.
“Creditors who stubbornly insist on imposing unrealistic debt repayment plans may well find that this is far from the best way to recover their funds, and that a little cooperation will go a long way towards securing longer-term repayments.
“Aggressive action to recover debt, while shortly to be allowed once more, would go against the spirit of everything that the Government has done to keep many businesses afloat, and to protect the jobs that they support.”
Finance industry figures showed that UK consumer spending rose above pre-pandemic levels in April for the first time this year, while consumer confidence levels remain below 2019’s levels, although they are slowly beginning to improve.
Eddie Williams continued: “Any business owners who are concerned about the state of their finances should seek qualified advice as early as they can. This will help them access the widest possible range of solutions and find the right one for their particular situation.”