This week, UK furniture company Multiyork is the focus. Entering administration in late November 2017, the interiors business left 550 jobs at risk and joined the club of a number of companies that collapsed towards the end of last year. The majority of Multiyork’s manufacturing staff were based nearby in Thetford, Norfolk and the company had 50 stores around the country. The company hadn’t succeeded in a frosty retail market, struggling to entice consumers who, Multiyork say, are increasingly reluctant to spend money on high-end, expensive furniture.
A local Suffolk company that originated in 1978, the brand was already rescued once from receivership in 1995 by Charles Wade of Wade Furnitureship, which also owns furniture company Feather & Black. Coincidentally, despite being a completely separate entity, Feather & Black also went into administration just days after Multiyork but was swiftly acquired in a rescue deal by Hilding Anders International a month later.
Commenting at the time of Multiyork’s collapse, appointed joint administrator Allan Graham of Duff & Phelps, who also managed the collapse of BHS, cited “economic uncertainty, rising commodity prices, increasing business rates and the fall in value of the pound which has increased the cost of importing raw materials and product” as the key factors leading to the company’s downfall.
According to the Multiyork directors’ statement of affairs, non-preferential unsecured creditors are owed just shy of £12m, proving once again that having invoice insurance is critical. Underwriters will be busy trying to reclaim unpaid invoices and owed funds from the company.
A Multiyork spokesperson added that there are “insufficient realisations to enable a distribution” to unsecured creditors “other than from the prescribed part, if any”. More confirmation that smaller players will undoubtedly be left scarred.
Insuring your invoices is crucial to keeping your business free from bad debt. Invoice insurance means you will get paid for your work each and every time, gives you peace of mind for growing your business and means you’ll be able to secure loans more easily than competitors without cover. Of course there are many ways to maintain a stable cash flow and keep your company growing, but invoice insurance should stay high on the list and recent folds, like Mutliyork, prove this time and again.
Running a smaller business can equate to more dynamism and adaptability when financial conditions fluctuate. Often you can respond faster and more effectively than larger, more clunky companies. Smaller businesses tend to hire less staff than larger ones, faster changes to running procedures can be implemented and alternatives for income generation sought out.
But one thing you can’t control is the partners you do business with taking care of their books, and so invoice insurance is one area that shouldn’t stay grey.
Our network of credit specialists can research prospective partners, equipping you with the right information to make decisions that are best for your business.
During the Multiyork collapse, other large scale businesses reported a slump in sales, blaming upcoming Christmas and changing consumer priorities. B & Q, John Lewis and online retailer AO agreed that expensive home purchases were slowing down. However their competition didn’t paint the same picture. ScS, one of the UK’s major retailers of floorings and upholstered furniture, revealed a 2.9% profit rise in the 16 weeks leading up to late November. Similarly, Dunelm, despite losing its newly hired chief executive John Browett, also reported buoyant sales around the time of Multiyork’s collapse.
That’s another benefit of being a smaller business – you aren’t as exposed to seismic changes due to leadership changes. Internal politics often disrupt large businesses with greater effect. But smaller scale, high growth companies usually adapt more quickly. Their chains involve less people and so changes face less resistance. If you head up your own business, then you can work out what’s needed and act quickly.
Whilst Multiyork’s collapse didn’t have such a scathing impact on smaller suppliers like Toys ‘R’ Us and Carillion did, it still highlights the need for younger businesses to prioritise invoice insurance in order to protect themselves from bad debt.
We’d be delighted if you get an invoice insurance quote for by clicking the link below – it’s a simple process and won’t take long.