Research has revealed this week that more and more small businesses are turning to the court to chase late payments, with the debts holding an average value of £4,619.
Credit rating service company Ormsby Street carried out the research, surveying 27,000 SMEs. It found that the number of county court judgements (CCJs) brought by small and medium enterprises has increased by almost a quarter (23 per cent) between the first and second halves of 2015.
Martin Campbell, managing director of Ormsby Street said of the situation: : “Almost £5,000 is a significant amount for any small business to have to go to court to chase, and it is hugely unfair that a small business should have to spend its precious time and resources on chasing payment for work that has already been delivered.
“Late invoice payment is fast becoming the scourge of small business in the UK, causing cash-flow issues that can impact growth and even the very existence of a business.”
Larger SMEs are increasingly more exposed to the chronic issue of late payments. Of those with turnovers of between £1million and £5million, 65 per cent wait more than 30 days for payment.
Overall, 67 per cent of SMEs with turnovers of more than £5million experience late payments. This compares with the national average of all SMEs which is 47 per cent.
Patience Wearing Thin
The research from Ormsby Street follows the high profile cases we reported on a few weeks ago, in which big name companies have delayed payments to suppliers.
More recently, The Forum of Private Business (FPB) on behalf of an anonymous small supplier, has taken on the world’s largest concrete maker – Aggregate Industries. It was over claims that invoices to the SME had gone unpaid for 93 days.
According to the FPB’s research projects manager, Thomas Parry, patience is wearing increasingly thin: “We found that with the last two firms that we put in our Hall of Shame – people are not prepared to tolerate it anymore.”
Victims of late payers, he said, are more willing to “take a stand”, despite the risk that relationships with clients will be damaged beyond repair.
“We’re about to see a big increase in the cost of doing business with the National Living Wage, so people are really having to focus on making sure that they get paid on time,” Parry added.
If you’re interested in improving your business cash flow through effective debt collection, but you don’t have the time or resources to focus on this task, we’d recommend that you contact Commercial Domestic Investigations for a free and impartial chat. We’ll explain what we can do to assist your business and improve your cash flow.
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.
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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.