Three reasons why SMEs should use a debt recovery service
Being paid what you’re owed is essential for any business, but for SMEs, a few missed payments from suppliers can have huge consequences.
Rhys Swann, paralegal in our debt recovery team, gives three reasons why SMEs should consider outsourcing their debt recovery to deal with unpaid invoices.
What happens when a business has unpaid invoices?
For most SMEs, unpaid invoices are more than just a mild irritant, but a threat to the stability of the business’ future. The disruption of cash flow can seriously impact an SME’s ability to manage its monthly payroll and invest in further growth of the business.
Statistics show that 27% of British SMEs are owed between £5,000 and £20,000 in unpaid invoices, and 55% of SMEs say that late payments have increased in the past few years (1), emphasising the point that not only is this problem large in scale, but it is growing in severity.
So how can a debt recovery service help?
1. It will free up your time and cause less stress.
When dealing with unpaid invoices, many SMEs still opt to try and recover the funds independently.
However, by directing your staffs’ attention away from their primary roles to focus on recovering invoices, this will disrupt the day-to-day running of the business and ultimately create further stress in the long run.
By utilising a debt recovery service, you and your staff can focus on what you do best – running your business and driving growth.
2. It can help protect your business relationships
Nobody likes to talk about debt, and having those difficult conversations with clients who haven’t paid their invoices can put a strain on your business relationships.
By using the right kind of debt recovery service – one that is fair, professional and works with your customers to recover what you’re rightly owed – your business relationships can remain intact.
3. It won’t cost you the earth
There is an assumption that the cost of recovering the debt owed will cost a large portion of what is recovered – but is this true?
Most businesses are unaware that they claim statutory interest and compensation through the Late Payment of Commercial Debt Regulations 2013, and the Late Payment of Commercial Debt (Interest) Act 1998. This usually covers a large portion, if not all, of the costs associated with recovery of the debt owed to them.
Consider the following scenario. A company has an overdue invoice from a debtor that totals £1,500 and has sent two invoices over the past four months requesting payment for the balance, but the debtor refuses to respond.
The interest would amount to £61.15, and compensation would amount to £140, covering £201.15 of the costs for recovery. which in our case at Muckle would fully cover the early stages of recovering invoices.
Get in touch
So, the next time that your business faces an invoice that hasn’t been paid, rather than using company resources on chasing the debt yourself, explore your recovery options through a professional and personable debt recovery service team, such as Muckle.
Contact Rhys using [email protected] for further information on how Muckle can help.
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