SMEs Lose thousands a year due to unpaid bills

Credit control firm, Santago, conducted the research which found that 81% of SMEs do not chase payments from late paying clients because they find the task ‘uncomfortable’. 19% of SMEs do not do so because they fear that their actions may result in antagonising their client base.

The report concluded that 34% of small businesses lose out on unpaid debt totalling thousands of pounds annually. Although the Department for Business, Innovation & Skills under MP Vince Cable, has been working to increase the penalties for large organisations which pay SMEs late, only 17% of the Santago survey participants were of the opinion that the treatment of the late payments issue had improved, whilst nearly a quarter believed that the situation had become worse.

The survey also highlighted the fact that most SMEs do not have a procedure for debt collection or a dedicated person employed to carry out the recovery of owed payments. 77% said they did not have a standard debt collection function in their business, and 13% admitted that they could acquire over half of debts owed if they assigned more time and effort to chasing clients.

Santago spokesman, Steven Renwick, said that larger businesses are currently able to easily take advantage of small businesses and the freelancers they engage, and advised SMEs to work on establishing ways to chase debt.

“SMEs 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.”