What to do when your business debtors cut the line on your payments

There’s a great scene in Black Books, the sitcom that revolves around the dissolute, chain smoking bookshop owner Bernard Black.

Bernard’s at his desk when the phone rings. He picks it up and there’s a creditor on the line.

“Yes, I am going to pay that bill,” he says. “I am… Yes, I know… No, I… Yep.”

Clearly irritated, he adds, “Excuse me, could you?” before reaching into a drawer, pulling out a pair of scissors and snipping through the telephone cord.

Visibly brightened, he continues talking: “Oh, you agree completely with everything I’m saying? That’s terrific. Thank you. Bye!”

If your business has similar problems with firms that owe you money, you are far from alone. New research by Amicus Commercial Finance has revealed that SMEs wrote off debts averaging £11,708 in the last year alone.

Worse, it found that 76% of small and medium sized companies wrote off debt during the period at a combined rate of £134 million each day.

The research was into 500 businesses, and it discovered that those employing between 50 and 249 people were the worst affected by non-payers, losing an average of £33,750 annually to unpaid debts.

Non-payment is a major issue for smaller firms. It not only eats into your profits, but can also seriously damage cash flow, hamper your ability to make your own debt repayments, buy stock and pay staff.

Unsurprisingly, the study revealed that a growing number of companies are turning to invoice finance to tide them over. This is when they sign over the invoices to a third-party company, which settles it (minus a commission fee), then chases up the full debt itself. Currently 8% of firms use invoice finance, with 19% planning to in the future.

While this is understandable, it comes with risks. In particular, using third-party invoice finance companies can damage your relationships with your clients and customers – and can have the knock-on effect of losing you repeat business.

At THP, we offer a more effective debt recovery service. Our skilled professionals will chase up your debts while retaining good relationships with your customers or clients, and in most cases secure payment without the need for legal proceedings.

By being firm, yet fair, we aim to get your money and keep your debtors onside for the future. So the next time it seems your debtors are literally cutting through the telephone line when you call to ask for payment, get in touch with our legal services team. We’re happy to talk through your options for no cost and at no obligation.

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