Rising Interest Rates May Affect London Debt Collection

Since the start of January, throughout the news there have been consistent reminders that the cost of living and inflation rates are hitting all-time highs. With many businesses and debtors still recovering from the pandemic, there could be a significant impact in collecting your debt and payment recovery. As stated by the Office of National Statistics, we have seen the highest 12-month Consumer Price Index rise since 1997. As the target of reaching 2% by April has already been exceeded, inflation is only expected to rise further than its current 5.4%.

How might you be affected

Unfortunately, inflation impacts every aspect of business. It affects the profitability and stability of most businesses due to the extra pressure it puts on finances. By their very nature, companies rely on purchasing goods and materials to trade, whether they need to be manufactured or used for a service. Those that rely heavily on purchasing raw materials tend to be the worst affected by price fluctuations.

Not only have businesses had to compete with inflation, we are also experiencing what some are calling ‘the perfect storm’. 2022 has also seen energy and fuel prices grow, increasing the overall costs to businesses. This has the knock-on effect of increasing prices for customers so that the companies are able to cover some of their costs, at a time where customers will have less disposable income. If customers are spending less, the ability of the company to make profits and stay afloat will be strained.

All of this means that as a creditor, debtors are less likely to pay their bills. It can be tempting to enable debtors to delay payments, however if the situation is only going to get worse, their financial situation is unlikely to resolve itself to the point where they will suddenly be able to pay their outstanding debts. This may result in you ending up with a problem debtor.

It is important to keep an eye on accounts, when payments are due and if they are not being paid. Keeping strong communication lines open with your debtors ensures that they pay you as a priority or create a management plan. For consistent unpaid debts you may then need to consider legal actions.

If you are constantly sending invoices and reminders that are being ignored, then it's time to get in touch with a London debt collection agency. At K2 Collections, we do not charge a fee unless we are successful. Taking debtors to court means high additional costs, employing a debt collection agency makes more sense for you.

The problem with inflation is the longer a debt remains unpaid it depreciates in value to you. As inflation increases costs, your recovered amounts will not enable you to receive the same amount of goods as previously, the spending ability will decrease. It’s important to act quickly and stay on top of amounts that are owed to you to ensure you receive your true value.

If you would like assistance in collecting your debts, please do not hesitate to contact us at K2 Collections. We are a London based agency collecting debts throughout the UK. We work on a no collection- no-fee basis which means that there are no upfront costs to you, or hidden subscription fees. We will explore all avenues to ensure that your debts are collected and we will keep you informed every step of the way.