A WORD FROM THE MANAGING DIRECTOR: KIRK CHEESMAN
What a whirlwind the last few months has been with the impact of COVID-19.
During March, many feared the worst and with significant lockdowns and reduced trading conditions, our industry braced itself for a possible flood of company insolvencies. However, a few months in and our data shows (at this moment in time), many of those fears are yet to be realised.
Insolvencies and credit insurance claims are down, recovery rates on collections are stable and despite an early influx, the number of customers seeking to reschedule overdue debts has reduced.
I’m sure government stimulus and wind-up protection actions have assisted in minimising the impact of corporate insolvencies. However, does it necessarily mean there is an ‘economic cliff’ of insolvencies about to occur in the future?
Many of our clients have advised their debtor aged trial balance has never been in a better position. Most are saying credit sales are strong, stable, or only slightly down. Naturally, there are some unfortunate sectors and industries which have been hit severely by lockdowns.
So, the question is – after the stimulus and protection mechanisms are removed, will there be a significant rise in insolvencies? Our data and overdue reporting currently suggests this may not necessarily be the case. Further, if there is an upswing in insolvencies and credit insurance claims (as predicted), it may only be a normalisation when viewed over the entire calendar year.
I wish all our clients and partners all the best in the current environment and NCI remains at your service to help with your credit protection needs.