SMEs often wait for 3 months before chasing debt

By Gillian Crotty

Small businesses are allowing customer debt to go unchased for as long as 3 months before implementing any internal debt chase procedure or turning to external debt recovery companies.

The cashflow of small to medium sized businesses is very dependent on prompt customer invoice payments, and SMEs can find their ability to function compromised if outstanding customer invoices begin to stack up. During the recession, and in the following months, many small businesses found themselves struggling to manage their cashflow as a result of lower business activity and late customer payments. Many SMEs improved their debt chasing procedures as a result of those difficulties, but various surveys suggest that small businesses are still waiting anywhere between 2 and 3 months before chasing a customer for payment of an outstanding invoice.

Setting out clear terms and conditions for payment is essential, and it is also important to demonstrate a willingness to recover a debt as soon as possible. Your company will rarely be the only business the customer has a debt with, so it is essential to move quickly to improve your chances of recovering the money owed. A phone call to the client is obviously the first step, but if payment is not forthcoming it may be necessary to increase the efforts to recover the debt. An external debt recovery company can provide assistance, and a Late Payment Demand (LPD) or Letter Before Action (LBA) can sometimes be enough to secure payment.

SMEs often cite a fear of losing the client if they aggressively pursue a debt, but the real question should be whether they would want to do any more business with a late paying customer who ignores debt chases anyway?

If you would like to receive information about a solicitor debt recovery process to chase outstanding invoice payments from customers in Northern Ireland, contact Wilson Nesbitt in Belfast by calling 0800 840 9291.

To read our guide to debt recovery in Northern Ireland click here.

To instruct us online to recover a debt on your behalf click here.