Late payments lead to more insurance claims than insolvency
Late payments now lead to more credit insurance claims than insolvency, according to a recent survey.
In the first three quarters of 2013, 60% of claims were made because of a customer’s protracted default, with 40% because of customer insolvency.
That is in contrast to 33% for protracted default and 67% for insolvency the previous year.
Andrew Share of Coface UK, which carried out the survey, said: “Our findings reflect the national trend, in that the number of company insolvencies continues to decline since its peak in 2009.
“Low interest rates and favourable credit conditions mean that businesses are able to survive, although many are just treading water unable to grow or invest. In this context it’s not actually surprising that the percentage of claim notifications due to late payment has almost doubled; some companies are trying to hold on to their cash for as long as possible even though this can have damaging consequences for their suppliers.”
Businesses, particularly SMEs, can struggle with cash flow when their clients fail to pay them on time, and the problem can have damaging consequences. Many find they are unable to pay staff or purchase materials, and are left in limbo unable to continue trading.
When faced with late payers, firms would be well advised to seek legal advice as soon as possible. A letter from a solicitor is often enough to ensure payment. If debtors still refuse to pay, there are several more stages we can go through up to and including court action.
Please contact Neil O'Callaghan if you would like more information about debt collection and late payment issues.