Lack of Invoice Finance Increases Bad Payer Issues
As many as 1,700 jobs are directly at risk because of the expected collapse of convenience store chain, My Local. Jobs are threatened because suppliers did not use invoice finance with bad debt protection.
Morrisons sold the convenience store chain in a £25m deal. The Guardian reports that Morrisons remain liable for up to £20m of debts in the form of lease guarantees. My Local’s landlords, are safe in the knowledge that Morrisons supermarket will honour their lease agreements, but what about other suppliers to the My Local chain?
Suppliers Big and Small Affected
The Nisa chain of supermarkets supplied the majority of My Local’s stock and were My Local’s largest supplier. A knock-on effect is inevitable and we will wait to see what happens at Nisa as an indirect result. More concerning though, is how local suppliers will deal with the impact of the news of My Local’s administration.
Retail Week reported that My Local stores would have a regional focus and would source at least 5% of its products from within a fifteen-mile radius. This could mean hundreds of small businesses are left waiting to see when or if they will receive payment for goods, which they have previously supplied.
Invoice Finance with Bad Debt Protection
Businesses using invoice finance with bad debt protection are less exposed. The loss of custom to these suppliers is undoubtedly a problem, but this is a perfect example of why using invoice finance makes business sense.
Not every invoice factoring agreement has bad debt protection running alongside it, but with retail uncertainty a feature of modern high-street trade, we advise customers to consider protecting their business’ incomes. Essentially, every invoice you put through your invoice factoring facility is protected in the event of your customer becoming insolvent.
If you want to know how we can help you ensure consistent cashflow in your business, give us a call on 0330 134 2826.