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Keywords: Contact Law, Dan Watkins, electronic invoicing, e-invoicing, e-invoicing systems
Matthew Garrow-Fisher | News | 23 February 2012
As the UK government steps up its efforts to tackle late payments to the country's small businesses, a new survey reveals that unpaid invoices are causing serious financial problems for many companies.
Contact Law surveyed more than 300 debt recovery specialists and found that two thirds had seen a notable increase in the number of small firms looking to recover monies owed over the last 12 months.
Almost all of those questioned had witnessed at least a ten per cent rise in small business clients, while a third had seen a jump of at least 50%.
Late payments can have a big impact on small companies, particularly now in such an uncertain economic environment where banks remain reluctant to lend.
The longer it takes for invoices to be settled, the greater the damage to cashflow. While some small firms may be fairly successful in chasing down outstanding debts, others may wait weeks or months.
Contact Law's survey shows that in 36% of successful debt recovery cases, it takes six months or more for companies to receive what they are owed.
And that's just the successful cases. Around a third of the specialists surveyed said they had seen an increase in unsuccessful cases, leaving small firms with large gaps in the balance sheets.
Dan Watkins, director of Contact Law, said: "SMEs are notoriously time poor and chasing payments can be incredibly time consuming and frustrating.
"Businesses that have clear payment terms, send invoices out on time and actively chase late payments are doing all they can to keep cashflow moving. However, after that, the responsibility lies with their client or customer to pay the agreed sum on time."
can make a big difference to overall payment times. Business minister Mark Prisk recently urged small firms to make use of e-invoicing systems "where possible" to help ensure timely receipt of payment.
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