In June 2016, the Association of British Insurers (ABI) reported that the number of insurance claims made by UK business facing bad debt had risen to its higher number in ten years and in April 2019 the Small Business Commissioner reported that on average, 32% of invoices were paid later than agreed terms.
Specters understand the impact that bad debt and late payment can have on a small or medium sized business.
Debt affects cash flow, which in turn affects the ability of your business to cover short-term liabilities, which can lead your otherwise thriving business into insolvency.
The Federation of Small Business reports that if payments were made on time then 50,000 small businesses would be kept open each year.
The issues surrounding debt recovery
We hear arguments that businesses do not want to upset customers and potentially lose them by taking debt recovery action, especially if the customer is a bigger company.
The other side of that argument is that if your business suffers in silence, then a customer who pays late and manages to get away with it loses any incentive to pay on time in the future and your business enters a vicious circle.
If your payment terms are clear and your customer has agreed to them, then you have an absolute right to demand that you are paid in accordance with those terms.
We also hear that taking debt recovery action is throwing good money after bad.
In some cases, the debtor has no assets, but at Specters we will always carry out an asset search before advising you to take further steps so as to ensure that debt recovery action works for you.
Court is not always necessary
Actually taking the matter to Court is not always necessary, as most debtors realise that they have an obligation to make payment and often the threat of being sued is sufficient to persuade the debtor to pay.
In our experience word gets around and once a business shows that they are prepared to enforce their rights and recover their debts, this has a deterrent effect on other customers who may be considering failing to pay.
We also understand the uncertainty around legal costs and your concern that they might get out of control.
That is why we offer fixed fees for undisputed debt, which we will also look to recover from the debtor.