Navigating Supply Chain Disruptions and Financial Challenges: A Debt Recovery Guide for UK Manufacturers
Manufacturers in the UK have been impacted heavily by the effects of issues such as the COVID-19 pandemic, Brexit and global events. The fragility of supply chains has led to shortages, delays and increased costs.
Published: November 11th, 2024
3 min read
Manufacturers in the UK have been impacted heavily by the effects of issues such as the COVID-19 pandemic, Brexit and global events. The fragility of supply chains has led to shortages, delays and increased costs. Consequently, businesses are facing financial struggles and increased bad debt. Navigating this landscape is complex, but Forbes are here to guide businesses through addressing these challenges.
Challenges on the supply chain:
The long-lasting effects of the COVID-19 pandemic, and changes in immigration rules post-Brexit, have impacted the labour market with a shortage of skilled and temporary workers. This, as well as material shortages, have caused significant delays on the supply chain, hampering the productivity and profitable of manufacturing businesses. These difficulties are set out in a 2021 Government report which details the imbalance of strong demand and disrupted supply leading to rising prices.
Simultaneously, global events have led to increased energy costs which has added to the financial struggles facing manufacturers, with Ofgem reporting that the energy debt has hit a record high of £3.69bn for UK domestic customers. This is a global issue adding to the rising transportation and material costs for manufacturers.
A recent Credit Connect article, from 22 October 2024, has reported that insolvencies within the construction industry have hit a 12-month high with further uncertainty to come, in part due to the fragility of the supply chain. It is therefore imperative that manufacturers can mitigate similar challenges which they face.
One of these challenges is cash flow. Shortages and delays negatively impact productivity and the amount of money coming into a manufacturing business. Meanwhile the rising energy prices increase overheads and non-payment of invoices by customers. Credit Connect reported in a separate October 2024 article, that small business have, on average, written-off of almost £40,000 in unpaid invoices within the last 12 months.
Supply chain disruptions are materially impacting on cash flow and so it is more important than ever to have efficient trade credit practices which includes an effective debt recovery process.
Debt Recovery:
With the impact of the issues discussed and increased financial struggles, debt recovery is a critical area and at Forbes, we are here to assist businesses at every stage of this process:
1) Letter Before Action (LBA) – we send a formal LBA to the debtor setting out the value and basis of the debt, and demanding payment.
2) County Court claim – If the debtor does not respond to the LBA or make acceptable payment proposals, we can file a claim in the County Court on your behalf. Where possible, we ensure that this is done via the online Court system to speed up the process.
3) Judgment – We act on your behalf to secure a County Court Judgment, ordering the debtor to pay you.
4) Enforcement – Should the debtor still not make payment, we advise you on the enforcement options available to you to enforce the Judgment.
This process can be confusing and complex, however we are here to guide businesses through these legal steps to raise their bottom line, improve cash flow and increase profitability.
Conclusion:
Debt recovery is a necessary tool for UK manufacturers to tackle the issues set out in this article head on, and positively impact their growth and profitability.
If you would like to discuss your options regarding debt recovery, please feel free to get in touch at Jack.Tasker@forbessolicitors.co.uk.
For further information please contact Jack Tasker