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Third of small firms forced to write off thousands in unpaid bills each year

December 15, 2016 at 9:00 AM

Small businesses in the UK are owed billions of pounds in late payments, but research has shown that a third are reluctant to chase slow-paying customers because they are worried about upsetting them or feel embarrassed.

Four in five say they avoid chasing debtors because they find the process 'uncomfortable', while one in five are afraid of antagonising their customers. This is a dangerous trend, as more than a third say they write off thousands of pounds of bad debt every year, the report shows.

When your business isn’t paid on time you may have difficulty paying your suppliers which not only impacts on your reputation but could have a negative effect on your ability to obtain credit - not to mention the strain small businesses are put under when they can’t pay their employees at the end of the month.

It is clear many businesses are worried about chasing the debts they are owed. Some try to leave it as long as possible until they are at a point where they cannot work without overdue payments before contacting their customers. They are often worried about the competition and concerned the customer will look elsewhere.

Despite a widespread unwillingness to pursue late payers, most small businesses recognise that taking action would deliver results: 30 per cent said they believe they could recover more debt if they were more proactive and 13 per cent of those who have had bad debt believe they could recover more than 50 per cent if they chased harder.

The study also shows that SMEs are using a variety of tactics for chasing debtors, including telephone calls, emails and legal action. Some have even shown up at the debtor’s office or home to escort them to the bank. Only 15 per cent utilise late payment regulations to charge customers for late payment.

It can cost as little as £50 plus VAT to recover a business’s bad debts - in practice it can cost you nothing once you allow for the interest you can charge and compensation of between £40 and £100 per outstanding invoice.

You can find more about our fixed-costs debt recovery service here

Spencers Solicitors' Debt Recovery Service Advert


About the Author

Philip McCabe Photo

Philip McCabe is an experienced employment lawyer who has been advising businesses and individuals on a wide range of employment and HR issues since 2000.

He is a member of the Employment Lawyers Association, Industrial Law Society, and Law Society. He regularly writes for national publications on employment law issues and is a regular columnist in the Derbyshire Times.

Statutory Maternity and Sick Pay - 2017/18 Rates Announced

November 28, 2016 at 9:00 AM

The Government has published the statutory rates for maternity pay, paternity pay, shared parental pay, adoption pay and sick pay from April 2017.

The current weekly rate of statutory maternity pay, adoption paternity pay, shared parental pay is £139.58, or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate. From April 2017 the rate will increase to £140.98 per week.

Money

The rates normally increase each April in line with the consumer price index (CPI). A 0.1% fall in the CPI in the year to September 2015 meant that there was no increase to the rates in April 2016. The rates have been frozen since 5 April 2015.

However, the CPI has increased by 1% in the year to September 2016, which is reflected in the rates for 2017/18.

“Their publication well in advance of April 2017 will help employers to plan their budgets for 2017/18, and to prepare amendments to their policies and documents on family-friendly benefits for April 2017.”

The rate of statutory sick pay is also increasing from £88.45 to £89.35. This increase is expected to occur on 6 April 2017.To be entitled to these statutory payments, the employee’s average earnings must be equal to or more than the lower earnings limit. The lower earnings limit is increasing from £112 to £113 in April 2017.


About the Author

Philip McCabe Photo

Philip McCabe is an experienced employment lawyer who has been advising businesses and individuals on a wide range of employment and HR issues since 2000.

He is a member of the Employment Lawyers Association, Industrial Law Society, and Law Society. He regularly writes for national publications on employment law issues and is a regular columnist in the Derbyshire Times.

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