Retail Rents Due – expected rise in debt recovery and insolvency

Although the general level of business administrations has fallen over the last few months, the retail sector is bucking the trend and the previous ‘Quarter Day’ for rents in June saw the largest wave of retail administrations since the height of the recession, and this month’s retail rents deadline looks set to spark another wave of insolvencies.

Quarterly rent payments fall in March, June, September and December and are typically one of a retail business’ largest expenses, and a hefty outgoing for those struggling firms in the sector. Three months ago, on the last back of the last quarterly rent day, Habitat, Homeform and Jane Norman all fell into administration, and the current situation is little improved with retail sales in August falling 0.1 per cent from the month before.

Frances Coulson, President at Insolvency Trade body R3, comments:

“Last time round, the rent day identified many retail businesses that had survived the recession, did not have the funds to meet their rental obligations. They had depleted their reserves to stay afloat and had no contingency plan for additional costs, unexpected outgoings or a fall in sales.”

It is no surprise then that as the sector has seen no improvement in retail sales, economic growth or consumers increasing their expenditure over the last quarter, those in the retail sector are once again going to be some of the hardest hit come the next rent day, due 29th September.

A staggering one in ten (8%) of retail businesses believe they may enter insolvency over the next 12 months, 1 in 4 have cash flow problems (25%) and six in ten (58%) are experiencing a decrease in profit, which is up 24% than the UK cross sector average and for this reason we are likely to see further retail casualties over the short and medium term and a ramp up of commercial debt recovery action within the sector.

If you want some advice on how to better protect your business from late payments, commercial debts, bad debt and customer insolvency simply get in touch with CCDR. We are a leading Liverpool Debt Recovery specialist with international reach and a client base of SME’s and multinational organisations. Our services include:  Debt Recovery, Debt Mediation & Debt Dispute Resolution, Business Reports and Debtor Tracing, Outsourced Credit Control and Corporate Legal Services.

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