UK SMEs are now more likely to accept excuses from late paying customers than before the recession hit meaning that many could be suffering with poor cash flow. This finding was as a result of an independently commissioned survey by positivecollections.co.uk, the online debt recovery service for businesses and consumers.
More than 260 business professionals across a number of industry sectors participated in the study, which found:
• Small to medium sized businesses are the most prone to suffer from late payers (with 74 per cent stating that they are likely to accepting late payment excuses).
• 10 per cent of organisations avoid chasing debts in the first place as they are worried about losing future business or simply feel too uncomfortable about broaching the subject.
• Micro businesses (businesses with one to nine employees) are the least likely to worry about debt recovery as 45 per cent claim they are always paid on time.
• 17 per cent of businesses[2] would try to chase debts but avoid legal action as they believe it will be too expensive.
David Green, CEO of positivecollections.co.uk comments, “Interestingly there seems to be a clear trend towards delayed payments which has been made more prevalent since the recession took hold. The fact that so many businesses in the UK have become accepting of this ‘late payment culture’ is certainly a cause for concern as this has implications on the whole business community and economy. However it is the SMEs that take the strain and in the worst case scenario have to fold, although the survey does highlight that micro businesses are less likely to suffer.
“In some cases, there will be genuine reasons for late payments which are unavoidable but, businesses shouldn’t accept this as somehow ‘inevitable’ or the ‘norm’ because there are ways to combat this and keep your credit control in good shape. Chasing debts can be a frustrating and often awkward process for many business owners, but seeking legal action is rarely an option for some businesses due to the costs associated with it.”
Positivecollections.co.uk aims to help consumers and businesses of all sizes to combat the issue of late payments and debt collection. Users will be able to register for free and start recovering debts ethically and inexpensively from as little as £20 to get the process moving.
The simple to use service streamlines the debt recovery process using a step by step automated approach ensuring the user is always in control every step of the way. Any fees are fixed to a minimum cost and are never incurred without prior agreement from the user.
The process works by automatically sending a series of up to four letters (costing a total of £50) and if payment has still not been received it will instruct nationwide firm, MTA Solicitors LLP, to act on its behalf.
Green concludes, “The cost of recovering debt does need to be evaluated and we believe the most natural first step is to send a letter from a professional solicitor as this will often solve the problem and urge a debtor to pay. Using a service like positivecollections.co.uk which is linked to a solicitors’ firm means that it is ready to handle the case if it reaches the litigation stage.
“Recovering debt as quickly and as smoothly as possible is one of the key aspects to staying afloat in difficult markets and tight economic times. This is hugely important for the business community as a whole if we don’t want to see this debt culture spiral out of control and have a very real impact on the health of small businesses and general economic recovery.”
