Commercial Domestic Investigations know that bad debt is a serious issue that affects a large number of small and medium sized businesses throughout the UK.  According to R3, the insolvency industry trade body, more than 100,000 UK SMEs are owed an estimated £16 billion by insolvent companies.

Bad debt is a problem which affects businesses of all sizes and from all sectors. It can be caused by many factors, including late payment from suppliers. But small businesses especially feel the pinch as they have often footed the bill for upfront costs – many of which don’t have the sufficient cash flow to survive.

Preventative measures

Findings from the latest SME Confidence Tracker from Bibby Financial Services has shown that a quarter of small businesses are affected by bad debt today.

For SMEs that do survive the effects of bad debt, it’s extremely important to take actions to prevent it from happening again. The Confidence Tracker showed that 29 per cent of SMEs that have been affected by bad debt take no action following it. Just 4 per cent of businesses seek bad debt protection from financial service providers and only 5 per cent diversify their business models.

Minimise the risk

Bibby Financial Services recommends a few ways and means of minimising the risk of bad debt. Firstly, due diligence and effective credit control are vital to understanding your customers and ongoing monitoring can help you identify potential signs of bad debt before the problem arises.

Another way to insulate your business against the risk of bad debt is to seek out protection to ensure you will still be paid if one or more of your customers becomes insolvent or unable to pay moneys owed. There are many funders who can offer this as part of a business’ funding agreement. Some also provide credit control and sales ledger management to help businesses identify potential issues before they become a problem.

Effective debt collection

Another way you can keep your cash flow healthy and in the positive is by effective debt collection. If you have any outstanding invoices or payments from suppliers it could be worth your while to get a debt collection agency involved to recover your payments and retrieve any money owed.

If you’re an SME owner who wants an informal chat about how you can keep your cash flow healthy with effective debt collection, don’t hesitate to contact us on our website or phone 08444 159200.

About Commercial Domestic Investigations

Commercial Domestic Investigations are regarded within the debt collection and credit control industry as one of the best credit management companies in the UK. Established in 1988 to support and service all sizes of companies in the field of Credit Management.

Commercial Domestic Investigations have recently featured in the press in The Guardian. To keep up to date with the latest debt collection news make sure to follow Commercial Domestic Investigations on twitterLinkedIn and Google+.

We now boast a national client base in excess of 30,000 companies. Commercial Domestic Investigations has grown by listening to clients’ requirements and adapting our services to meet all companies’ needs from Sole Traders, SMES, Ltd and Plus. Please contact us on 08444 159200 for more information.