Cash strapped high street retailers already struggling with online competition, employment costs and rents are increasingly being hit with another problem – bad debt.
Bad debt is a struggle for most businesses, but this is and extra burden retailers can certainly do without as stores continue to close down across the country on a frequent basis. According to data released by Creditsafe, there has been a 2,464% increase in debt owed to retailers.
One of the major problems with bad debt of course is the difficulties involved in pursuing payment and the much reduced chances of ever being paid the money owed. This results in bad debts often being written off and this only adds to the problems encountered by businesses struggling to generate sufficient profits.
Not surprisingly bad debt will have contributed to the near 60% increase in retailer insolvencies in the second quarter of this year. This figure is cause for concern when compared to the overall figure of 30% for all industries.
With little being done to improve the fortunes of high street retailers, it is important to at least have plans in place to deal with debts that can put the future of a business in doubt.