Many Businesses in the UK are facing a tidal wave of unpaid invoices due to the current pandemic.
Over 57 per cent of Small and Medium sized Businesses have reported late payment issues since the Covid-19 began. This represents almost 3 in 5 SME’s across the UK.
Independent research carried out by Close Brothers Asset Finance have confirmed what most Small Business owners already knew.
The issue of SME’s not being paid on time or at all is nothing new. Research shows that since 2016 the problem of is an ever-growing issue for the UK SME Business community.
The impact of non-payment for Businesses is huge and should not be underestimated. It restricts the potential for companies to grow and despite various government schemes, it remains the nemesis for SME’s.
The pandemic has only served to exacerbate the problem. With the threat of court action temporarily removed, unscrupulous businesses have used the pandemic to avoid paying invoices.
One of the hidden key issues created by the non-payment of invoices is the actual time spent chasing payment.
UK Businesses need a solution
The financial problems that many SME’s are facing could be eased with pragmatic decision making. It is currently estimated that as many as a 700,000 UK Businesses are facing financial distress despite the government’s best efforts with various schemes.
The closure of County Courts and suchlike due to the pandemic has meant a backlog of invoices stacking up for those that choose the well-trodden path of expensive litigation.
As a result, many firms are now turning to Professional Debt Collection Agencies as a solution.
Using a Debt Collection Agency
Gone are the days of a dark stigma being attached to the use of Debt Collection Agencies. It is now seen as an acceptable form of resolving late and non-payment issues for many Businesses.
Choosing the right Debt Collection Agency to partner with should be a matter for serious consideration. As with any business decision, you need to apply due diligence and make considerations.
Not all Debt Collection Agencies will have the professionalism that mirrors your business so a good fit is imperative. A quality company will provide a quality service.
Results, Cost and brand protection are all major considerations that any Business needs to factor in to its decision-making process. Overly aggressive or unlicensed Debt Collectors should not be an option as a Business has its reputation to consider.
The Credit Services Association is the only Trade Association for the UK’s Debt Collection industry and any possible suitors should be members of the CSA.
Primary types of Debt Collection Agency in the UK
Typically, there are two main niches within the UK’s Debt Collection industry. This can be split further with different Business sector but typically these are the two main elements:
Business Debt Collection
Business Debts are normally formed by failed Business to Business transactions. This is where goods or services have been provided but not paid for. There are legislations governing unpaid Business Debts such as the Late Payments of Commercial Debts act.
B2B Debt Collection is a key solution for many companies in the UK as it helps keep their Business profitable and ensure the optimisation of its cashflow. A Professional and compliant Business Debt Collection solution can be a massive asset to any Business or Company.
The most notable Business Debt Collection Agency in the UK is the long running Federal Management. They represent many well-known SME’s and PLC’s with their high level of Professional Debt Collection B2B services. An Award-Winning company that is also FCA Regulated and prides itself on empowering Small Businesses.
Federal Management state that less than 1% of the Debts they are instructed on require court action. This may well be a complete game changer for many companies who have traditionally kept their Debt Recovery in-house.
Private & Consumer Debt Collection
This sector tends to cater for debts that are owed by individuals. It can be monies owing for goods, services or type of personal finance obligation.
Debts owed to Dentists, Private Schools and other public serving sectors utilise Debt Collection Agencies within this sector. High Street bank lending also falls into this category.
This sector of Debt Collecting tends to be more precarious as it is far more heavily compliant. Again, a Professional approach is essential. Overly aggressive practices are not tolerated so a Professional company is the key to getting an all-round effective service.
The famous name within the Private Debt Collection Agency sector is Frontline Collections. A Nationwide Debt Collection specialist that helps Businesses and Individuals collect personally owed debts on a low fixed fee basis.
Should Businesses continue to ‘wait it out’ for payment?
Businesses are warned against waiting to act in respect of Unpaid Debts. Being the first in the queue for payment will far more likely see them get paid rather than being at the back.