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Are You Doing Enough to Manage Bad and Late Debts?
An increasing number of small and medium
sized businesses are finding late payment
and bad debts to be a serious problem. A
survey by Altradius has shown that bad debt
is now a problem for over 20% of SME’s;
while a third are also suffering because of
late payment.
 The
average SME now writes off an average of
£14,000 of bad debts a year; if your
business sells at a profit margin of 5%,
then you would need extra sales of £280,000
to cover that lost cashflow. At a profit
margin of 1% you would need £1.4 million of
extra sales!
On the positive side however, small
businesses are now the least tolerant of
late payments; with 23% ready to terminate a
business relationship if a customer pays
late just once, compared to 16% for all
sized businesses. The survey by the Better
Payment Practice Group (BPPG) also found
that 67% of businesses would terminate a
relationship after less than five late
payments.
33% of the businesses surveyed would let a
customer pay late five or more times, if you
fit into this category you should take a
look at improving your credit policy and
credit management. Late payment can
seriously damage your cashflow, and simple
changes to how you deal with credit could
help your business prevent it.
These results also show that you cannot
afford to be slow with your payments, or you
could risk ending your business
relationship.
Find out more about how Factoring can help
you get quick finance from your invoices.
If you have late payments, why not see
whether our DebtClaim service could help you
get paid?
Find out more about managing your credit in
our Credit Policy portal.
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