Small Businesses Losing Thousands in Debt Every Year
34% of small and mid-sized businesses are failing to chase-up late payment debts, despite billions being owed
Research shows that 34% of small businesses fail to pursue debtors, with 81% of businesses finding it ‘too uncomfortable’ and a fifth fearing it will cause them to lose customers.
The report, by credit control service Satago, highlights that late payments remain a huge problem for the small and mid-sized business community with only 17% stating that there has been an improvement.
This is not surprising considering a third of small and mid-sized businesses are writing off debt every year with 50% admitting that money could have been recovered if they had made an effort to pursue it. Furthermore, although businesses continue to lose money on unpaid debt and late payments, 77% do not have a procedure in place to follow up on default payments and only 15% operate a late payment charge regulation.
Founder and CEO at Satago, Steven Renwick, discussed the findings:
“Despite losing out on thousands of pounds every year our research shows that SMEs are struggling to deal with late payments. SMEs feel uncomfortable chasing, do not want to annoy customers and a majority do not have a process in place to deal with the situation.
“The current supplier power structure means that big business is in a position to take advantage of SME and freelance suppliers. Small businesses must recognise that proactivity can help them deal with late payers: Get a process in place, use the law and work with a third party to remove the distress of chasing.”
For more information, look at our guide on tackling late payments.