Don't drop your guard...

Whilst the third quarter of 2010 saw the numbers of corporate and personal insolvencies fall considerably on the same period a year ago, trouble could still be on the horizon for many.

Worrying numbers of SMEs are exposing themselves to risk of failure due to weak financial controls and management, which lead to severe difficulties when hit with an unexpected bad debt. Declining profits and a reduction in sales in key sectors adds to the cash flow pressures that many are experiencing.

Although corporate insolvency numbers decreased in 2010, experience tells us that we can expect to see the numbers of failures rising as the recession ends. Insolvency is a lagging indicator. Don’t get caught out by bad debts. Keep good credit control policies in place and take effective and quick debt recovery action.