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The time spent chasing late payment and the effect of dealing with bad debt is
costing SMEs an estimated 286 million man hours and nearly £3.6 billion per year
according to new research.
The survey, from Bibby Financial Services, also reveals that despite rising
business failure rates, SMEs are still failing to adequately protect themselves
from bad debt, with 47% reporting they have no provisions in place should an
unexpected debt arise.
Of the owners and managers that have planned for bad debt, 34% rely purely on
the threat of legal action, 27% would use their bank overdraft facility, while
15% plan to cover the shortfall from their personal savings.
David Robertson, chief executive of Bibby Financial Services, commented: “It
seems that far too many owners and managers are burying their heads in the sand,
hoping that dealing with late payers and bad debtors will not happen to them.
"Unfortunately, however good the relationship with suppliers and contractors,
the reality is that chasing payment and dealing with bad debt is a fact of
business life which can strike any business at any time, however unexpected.
“I would urge owners and managers to consider the impact of being on the
receiving end of a late payment or a bad debt and how the systems, or lack of
systems, they have in place would allow them to cope with it.
"Given that a lack of foresight and planning could lead to a real threat of
business failure, reviewing provisions in place should be a matter of priority
for small business owners and managers across the country.”
Source:
Credit
Control Journal
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