The cost of living crisis is hitting people in a wide variety of ways, and recent research has illustrated another. In the twelve months since January 2022, the number of people seeking help with their debts has increased more than threefold — and most cite rising prices as the main reason.
The Rise in Debt Enquiries
A survey was carried out by debt advisor MoneyPlus Advice, after they saw initial enquiries rise by 353% over the past year. They asked customers about their feelings concerned with managing debt at present.
Out of the people surveyed, no less than 95% expressed extreme worry about the current cost of living, with 35% expressing the greatest concern about energy prices.
While the sample was restricted to people who have looked at getting debt advice, it seems clear that debt is growing. At the same time, it’s clearly price rises, and energy prices in particular, that are driving that growth.
What’s the Prospect for 2023?
The Bank of England’s Money & Credit report for November 2022 shows a similarly pessimistic picture. An additional £1.2 billion of credit card borrowing has shown £1.5 billion added to the total consumer credit figure.
Chief Executive Officer at MoneyPlus Chris Davis admits that “we’ve never seen anything like this.” He adds that figures suggest that Christmas was paid for on credit to a much greater extent than usual.
“It is yet unclear,” continues Davis, “if that credit is manageable or not, and our concern is that credit is being used to mask the real challenges faced by a rise in essential costs, such as energy bills. We don’t expect to see the real impact of Christmas spending until further into the year when debt repayments need to be made and the energy price cap is removed in April.”
How Will This Impact You?
Even assuming that you’ve made provisions allowing you to keep financially afloat through the cost-of-living crisis, the rising level of debt could have a severe impact on your business. Your customers could themselves be struggling with debt, or else there could be a knock-on effect from their customers.
Whichever is the case, you could be seeing an increase in unpaid invoices — and this will need careful handling. While enforcing insolvency can sometimes be the best approach, you’ll often receive more by negotiating with the debtor, especially if they want to pay but are finding it difficult.
This needs skill and experience to arrange, however. Give me a call if you need help getting paid in the middle of a debt crisis.