40% of Small Businesses Don’t Know How Much Money They’re Owed
The average amount of recorded debt written off stands at over £31,000 this financial year
40% of UK small businesses who had to write off debts in the last financial year, don’t actually know how much money they’re owed from debtors, according to a report from Direct Line for Business.
The survey of over 700 enterprise owners revealed that 82% of small firms still have balances outstanding from their debtors, with the average business being estimated to be owed a total of £62,957.
UK businesses were forced to write off a combined £5.8bn last year, which equated to more than £21,000 a day.
Suppliers becoming insolvent and unable to pay what they owed (29%) was the main factor for writing off debts, followed by those that thought suppliers didn’t have sufficient funds to pay their debt (17%), not having the time to chase debts and not having the funds to chase debts (both 11%).
Not wanting to damage a future relationship with a customer (10%) and not understanding how to go about reclaiming owed payment (3%) were also cited as reasons for writing off debts.
The average amount of recorded debt written off stands at over £31,000 this financial year.
This report comes just days after it was revealed less than 40% of UK small businesses have adequate credit insurance to deal with non-paying customers.
Nick Breton, head of Direct Line for Business, said:
“With more than a million small businesses based across the UK, these enterprises really do make up the backbone of the British economy.
“However, it is alarming to see just how much hard work goes unrewarded, especially when considering that many small businesses appear reluctant to chase debts, with reasons ranging from thinking that the client may not be able to afford the cost to damaging their relationship.
Worried about non-paying customers? Why not investigate a company before going into business with them?