The True Cost of Late Payment and Debt Collection

The financial devastation caused by the COVID-19 pandemic has led to thousands of SMEs facing bankruptcy, which has a knock-on effect on the UK economy. The turnover of SMEs in the UK is estimated at £2.2 trillion per annum, and when this section of business suffers, the whole economy takes a hit.

A crucial factor in many bankruptcies is late payments. It has been estimated that late payments are costing the UK economy as much as £61 billion, which is a dramatic 20% rise compared to 2020. Some reports suggest that two-thirds of UK SMEs have at least one late payment problem on their books, with the average value estimated at over £15,000. So, tackling late payment is a vital step on the road to financial recovery for individual businesses and for the economy as a whole.

The Impact of Late Payment

Late payment can have a devastating impact on an SME. It forces the business to focus on the daily process of chasing debt and worrying about cash flow, rather than being able to plan and invest in the future. Even just one month’s delay in getting paid on a debt could reduce the level of capital spending an SME can undertake by as much as 1.2%, potentially hitting profitability for years to come.

The day to day business of chasing overdue payments itself has a cost. Time spent pursuing a debt is time that is not being devoted to running your business, finding customers and focusing on growth and development. At the same time, it can have a significant impact on a business’s ability to access affordable finance, as being able to demonstrate a clear cash flow is an important prerequisite.

With up to 15% of SMEs in the UK at risk of insolvency over the next few years, as the COVID-19 support programs are withdrawn, there is a need for urgent action.

Action on Debt

The good news is that there are steps that a business can take to address this situation, and one of the most effective is to consider calling on the services of a professional Debt Recovery Agency. Debt Collection has economic benefits.

Debt Collection specialists have the expertise and the experience to find the fastest and most effective ways to recover late payments. Modern Debt Recovery companies take a professional and flexible approach to recover debt while using the latest methods, and debtors are often quicker to pay when approached by professionals in this area. Using a reputable debt collection agency also gives you a better chance of maintaining customer relations once the debt issue is resolved.

By hiring an expert debt collection agency, you will dramatically increase your chances of recovering your late payments, while freeing up your staff to focus on delivering the aims of your business. So if you are worried about late payment, get in touch with us today and let our late payment recovery experts show you how we can help you boost your cash flow and get back on track.

If you want to collect debt from overseas or you have questions regarding international debt recovery, get in touch with us today. Our experts will be able to give you the advice you need and can help you to quickly and efficiently recover your debt. CLI is a member of the CSA.