Almost £780,000 per day of money owed to businesses was written off in the final three months of 2020, research claims.
Data from financial risk technology provider Red Flag Alert found the value of bad business debt increased by 410 per cent annually in the fourth quarter of 2020 with £779,997 of unpaid debt written-off each day.
Insolvent debt grew by around £72m during the past quarter, whilst the UK’s total level of written off debt grew by 3.3 per cent in 2020, rising from £1.83bn to £1.89bn.
Mark Halstead, managing director of Red Flag Alert, said this increase in insolvent debt reflects a rise in the value of county court judgements against businesses in the fourth quarter.
The Registry Trust recently reported the average value of CCJs against larger incorporated businesses rose by 39 per cent from £4,387 to £6,095,
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“This is indicative of the serious bad debt problem that’s building in the UK, with potential to cripple businesses in 2021/22,” Halstead said.
“Creditors are reverting to old fashioned high court writs to recover much needed cash.
“We can expect to see more and more aggressive debt recovery action this year, which will initially cause the failure of small businesses, but will have far-reaching impacts that also push large companies towards insolvency.”
He warned the level of debt could get worse once government support schemes are scaled back.