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Small firms reluctant to chase late payers
MORE than three out of every four small and medium-sized enterprises (SMEs) are reluctant to chase late payers through the courts, new research shows.
Only 24 per cent of 300 small business-owners interviewed by Cattle Invoice Finance said they had taken legal action to recover money owed, even though 77 per cent of them were aware of their right to charge debtors a percentage on unpaid invoices.
Late payments increase pressure on recession-hit firms but respondents to the survey said they were afraid of alienating customers.
It is a problem which has been highlighted with increasing frequency by small businesses over the past year. A number of Government departments have been among those accused of taking too much time to pay bills, hitting firms who have suffered as credit lines have remained frozen.
Comments from respondents to the survey included: "I think there is a fine line between maintaining the relationship with customers and souring it. I wouldn't want to do anything to put pressure on them in this way"; and "all of our clients are repeat customers, so sometimes it would make the relationship a bit strained".
David Jones, regional managing director for Yorkshire at CIF, said: "Managing cashflow is the key issue facing SMEs in the current economic climate, and being paid on time can make the difference between survival and collapse.
"For that reason, it is surprising that so few SMEs are pushing for settlement of unpaid invoices, charging interest or taking legal action.
"There is nothing worse than a debtor spotting a weakness and, if invoices aren't chased, many companies will take advantage of the situation and avoid making payment, particularly when money is tight."
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Friday 25 May 2012
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