The multi-award-winning technology division of Funding Xchange, FXE Technologies, which offers banks, brokers, and lenders a variety of digital SME financing options, is issuing a warning about a growing tendency that is reminiscent of the “jingle mail” problem of the previous housing market catastrophe. Back then, homeowners would often turn in their house keys to mortgage firms without having previously missed payments because they were unable to handle the weight of negative equity.
Commercial lenders are reportedly finding a similar pattern, according to FXE. FXE Technologies CEO Katrin Herrling made the following observation: “We are noticing an increase in enterprises that are unexpectedly shutting down and stopping payments on financing agreements, frequently without a lot of notice. A JCB left locked in the yard instead of house keys is the modern-day equivalent of “jingle mail.”
What were first only anecdotal now seem to be supported by recent “voluntary insolvencies” statistics that were released by the Insolvency Service of the UK Government on August 15. In comparison to pre-Covid eras, the data shows a twofold increase in voluntary insolvencies.
Katrin makes two predictions on the causes: “Business owners may just be worn out from navigating the Brexit, Covid, Ukraine, and soaring inflation storms.” Our data also shows that the “Covid Cash Pile” is for many businesses morphing into a mountain of obligations that must be paid back.
The need for lenders to understand changes in their portfolios is emphasized by Katrin Herrling: “FXE’s Portfolio Monitoring solution can help lenders detect subtle signs such as declining cash balances, third-party arrears, or failed payments, enabling real-time, data-driven portfolio management strategies. This gives lenders the ability to focus their assistance where it will genuinely matter – for both businesses and their own balance sheets.
End
