SMEs are feeling the financial strain as unpaid debts rise, with many writing off significant amounts each year, impacting their operations.
Newport: Businesses in Gwent are really feeling the heat when it comes to unpaid debts. It’s tough out there, especially for small to medium-sized enterprises. On average, UK businesses are writing off around £40,000 each year due to these debts.
Recent research from Bibby Financial Services shows that bad debt for SMEs jumped by a whopping 127% in the first half of this financial year. Over 40% of these businesses have faced non-payment issues in the last year, which is a big deal.
This financial strain doesn’t just hit the businesses directly; it also affects their suppliers. About 58% of companies have seen at least one supplier go under, and 56% have had to deal with the insolvency of a customer.
The government estimates that late payments and bad debts lead to the closure of around 50,000 SMEs every year. That’s a staggering number!
To tackle this issue, new laws now require large businesses to report their payment practices in their annual reports. This means they have to be clear about how they handle payments to smaller companies.
January is often a tough month, too, as businesses rush to pay off various bills, including taxes. Newport-based Bellavia & Associates, a law firm that focuses on debt recovery, is advising businesses to tighten up their credit control and debt recovery processes right at the start of the year.
Zep Bellavia, the managing director, emphasizes that cash flow is crucial for smaller businesses. He suggests that the beginning of the year is a perfect time to get serious about managing credit and recovering debts.
He also points out that businesses should weigh the cost of bad debt against hiring a lawyer for debt recovery. After all, nothing is more costly than letting bad debts pile up.
Bellavia & Associates offers services like freezing third-party bank accounts to speed up payments and provide useful information for recovering debts. They also conduct health checks on businesses’ credit control and debt recovery processes.
In closing, Bellavia encourages businesses looking to improve their cash flow to reach out and see how they can assist. It’s all about staying on top of things!
