07 Aug 2017
Small businesses often experience late payments or non-payments of invoices by both consumer and trade customers.
Late payments and non-payments can have a serious effect on the cash flow of a small or medium sized business. For example, unpaid invoices from customers can make it difficult for a business to pay its suppliers, purchase stock or pay bills. If payments from customers are continually late and a business experiences cash flow problems, it may have a knock on effect on the business’ ability to trade.
In 2016 insurance company Zurich, conducted a study on the effect of late payment on SMEs and found that more than 53% of Britain’s small and medium sized businesses have issues with late payments. Moreover, 41% of those businesses experience serious cash flow problems as a result.
According to the insurer’s SME risk index, £225bn is owed in late payments to British SMEs and two thirds of UK SMEs agree that this affects business’ ability to trade.
The Zurich study also found that 58% of SMEs will not attempt to claim late payment compensation because they are concerned about losing business.
Before beginning recovery proceedings, businesses must consider the cost of recovering the debt versus the value of the debt itself and the effect that the course of action may have on future business with the customer in question.
It is also worth considering the ability of the debtor to pay, they may be experiencing financial problems or believe that they have a valid counter claim against you. Ultimately, there are a lot of factors to consider when beginning debt recovery proceedings.
Knowing where to start with recovering unpaid debts can be daunting, but St Helens Chamber can help. The Business Information team has a wealth of knowledge at their fingertips and can provide information on how to recover unpaid debts, late payment legislation, making a small claim and credit control.
To find out more contact the Business Information team on 01744 742015 or email email@example.com