Here at Commercial Domestic Investigations the team fully understand just how much of an impact late payment can have on SME’s.
This week we are looking at a survey carried out which suggests that SME’s don’t act on late payment issues for fear of tarnishing their reputation.
SME Insider reported that fear of offending customers and reputation worries stop approximately 60 per cent of small business owners from claiming late payment compensation, according to a survey of credit professionals.
Lovett’s, a Surrey-based commercial litigation firm revealed that 58 per cent of the 149 credit professionals that they interviewed said that fear of a loss of reputation would stop them from acting on late payments.
This issue affects millions of SMEs nationwide, and Lovett’s estimate that almost one in four businesses are being paid on average 1-2 months late, with just 22 per cent getting their bills paid within the terms of their arrangement.
Back in June SME Insider reported that UK small businesses are spending on average £10.8 billion a year in an attempt to recover overdue payments.
The survey also revealed that interestingly less than five per cent of those questioned were put off by the costs of late payment retrieval.
Around 20 per cent of the credit professionals said it is too much effort for them to follow up with their suppliers, while 18 per cent said they simply don’t have time for the process of recovering late payments.
Chairman of Lovett’s, Charles Wilson, said that small business owners perception of claiming compensation is far removed from the reality of actually doing so, claiming that a loss of custom rarely ever happens when recovering late payments.
Wilson said that ‘‘Many businesses live in fear of upsetting their customers by claiming what is rightfully theirs,’’
‘‘A lot of this comes down to the terms and conditions which form the basis for the relationship – if it’s made clear from the outset that late payment compensation will be claimed if payments are overdue, then there’s no surprises and in fact, it can often incentivise customers to pay within terms to avoid the additional cost.’’
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.
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.