If you’re a supplier operating in the pubs and bars sector, the recession appears to have had several effects that make effective credit control more important than ever.
According to a PricewaterhouseCoopers report, the total number of pub insolvencies in 2012 was identical to 2011, at 345 individual companies or premises.
David Chubb, PwC’s business recovery partner and a specialist in leisure and hospitality, suggests that this high level of consistency hints at this being the “normal rate of failure” for the sector.
In contrast, during the same year-on-year period, insolvencies dropped by 3.6% across the board, which further hints that conditions in the pubs and bars segment are not improving in line with the wider economy.
But the report also notes an opposing trend of new innovation and investment into the sector, with capital expenditure relatively high among those trying to stake their claim to a place in the market.
“There is also good innovation in the sector as operators try different offerings,” Mr Chubb observes.
Together, these trends mean that there is certainly a good level of activity within the pubs and bars supply chain, but that suppliers should be careful in deciding who to extend credit to.
If you are operating within this supply chain, keeping a watchful eye on your credit control processes can help you to make sure that you capitalise on the upper end of capex from new entrants, without falling foul of being owed money by those operating on the brink of insolvency.