Large losses at a debt management company.
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An ironic story has hit the news this week. It has emerged that the Edinburgh-based debt solutions company, Invocas, has reported half year pre-tax losses of more than £1.5m.
Most of the loss was down to one-off restructuring costs, including money paid out after terminating contracts.
Earlier this year, Stephen Lightley stood down as chief executive with the group after just a year in the job.
The company said it had cut staff and overhead costs during the past six months, and at the same time won significantly more work as is easy to imagine during a recession.
The number of people working for Invocas dropped from 164 last year to 143 in September this year.
The company said marketing costs fell by 11% as steps were taken to cut advertising spend, management positions, call centre roles and agency fees.
The work won during the six months to September increased by 16% to £3.2m and the number of cases won increased to 854.
In a statement, the chief executive of Invocas, David Macmillan, said he believed economic conditions would continue to favour the debt industry. “We are anticipating increased levels of corporate insolvencies as a consequence of recessionary pressures on consumer and corporate spending and more aggressive tax recovery tactics by HMRC, and see little prospect of the overall level of personal insolvencies reducing in the foreseeable future.”
Apart from the moral ambiguity of many companies in the so called ‘debt industry’, the losses at Invocas clearly demonstrate how everyone, businesses and individuals, must keep their eyes on their finances because even those that seem the most secure can come unstuck in this economic climate.
