Top UK Debt Collection Firm Warns Small Businesses: ‘Act Now or Pay Later’

Leading B2B Debt Collection specialists Federal Management have urged UK Businesses to act swiftly on Small and Medium Enterprises (SMEs) late payments. The strong recommendation to “act now or pay later” comes from the Debt Collection experts after the release of the Federation of Small Businesses (FSB) latest report.

The “Time is Money” report highlights shocking statistics within the UK’s small business sector. FSB’s survey revealed that a staggering 52% of small Businesses in the UK had experienced late payment in the past three months alone.

25% of small businesses reported an increase in late payments with the most affected sectors, including construction, education, administrative, scientific, logistics, and IT.

The “Time is Money” report was intended to show the impact of late and non-payment on small businesses in the UK. This was only weeks after another survey revealed the true mental implications of late payments on small business owners.

With an estimated five million SMEs in the UK, experts predict millions of jobs could be at risk if the curve does not dip anytime soon.

Debt Collection Agencies Helping Tackle The Problem

Debt Collection Agencies in the UK are helping tackle the problem with millions being collected monthly. One Debt Collection Agency that has been synonymous for Small Business Debt Collection for nearly 20 years is Federal Management.

Marc Curtis-Smith, Managing Director of Federal Management has advised small business owners to act swiftly in the face of unpaid invoices.

“Late payment was destroying small businesses even before the pandemic. The pandemic seems to have just exacerbated the issue and made it worse”

He advises, “It really does pay to act quickly when faced with an unpaid invoice. It is basically a case of ‘act now or pay later’ when it comes to unpaid invoices.”

“Every day at Federal Management, we speak to small business owners. Whilst we can help most recover what they’re owed, unfortunately for some, they leave it too long to act.”

Just last year, industry experts claimed that professional debt collection agencies could save up to 500,000 SME’s in the UK from permanently closing their doors.

Other findings detailed within the report reveal that:

  • 37% of SME’s applied for credit to manage their cashflow.
  • 62% of the public say businesses should be paid within a week.
  • 55% of the public would support more controls.

The report also makes various recommendations to the government. Amongst those are a call for large firms to be forced to publicly commit to maximum payment terms to small business suppliers via new laws by 2027.

The UK’s Ongoing Problem of Unpaid Invoices

The issue of late invoice payments is not a new problem. However, it is estimated that hundreds of thousands of small businesses are under serious threat of going bust this year.

Recent surveys have shown there is also a mental health impact on SME owners caused by late payments. Unpaid invoices can cause a mental and emotional drain along with limiting resources and cash flow.

In the past, the government launched well-intended actions to stem the flow of late payments, but none seem to have worked.

Soaring energy costs already hit some UK Small Businesses hard, with some even closing over the winter months. The energy price cap introduced by regulator Ofgem does not include Businesses.

Regarding the “Time is Money” report, FSB Policy Chair Tina McKenzie said: “Enough is enough. Late payments in the UK have continued to spiral out of control, while since 2019 Ministers lost the momentum and enthusiasm to make a difference.

“We now need to reinvigorate this agenda, and to push for growth and productivity – the best way to do this is to sort out the UK’s poor payment culture.

“Our report highlights the urgent need for change and the importance of fair payment practices and sets out a clear set of reforms.

“Small firms are already being stretched beyond their limits with rising energy bills, rampant inflation, and a mounting cost of living crisis.

“Cash flow is already tight, and that is compounded by being kept waiting months for invoices to be paid, which a serious roadblock to growth and investment.

“This also hinders productivity due to the excessive time and effort expended on chasing late payments.”

Many Small Businesses Turn To Debt Collection Firms

The laborious chore of chasing unpaid invoices can be time-consuming, stressful, and costly. Many hours can be wasted chasing unpaid invoices and unpaid accounts.

Not only does it cost in terms of actions performed, but it also costs in terms of time. A time that can be spent doing more pressing tasks and focusing on the customers that do pay.

Thousands of small businesses turn to professional debt collection agencies for help. The UK Debt Collection industry has provided a crutch for many businesses, large and small, when dealing with unpaid debts.

Partnering with a professional debt collection agency is much more cost-effective than other options. Whether it is on an ad-hoc basis or a steady stream, there are efficient solutions to boost any small business’s bottom line. Long gone are the days of the expensive litigation route.

Noteworthy Small Business Debt Collection Services

It is essential to understand that not all debt collection agencies are the same. You would not employ just anybody to work in your business so you should not employ just any firm to represent it.

Business-to-business debt collection agency, Federal Management, is a trusted and professional name. A well-established and FCA-regulated firm, they recover millions of pounds on behalf of Small Businesses annually.

Personal Debt Collection services are also a game changer for public-serving businesses. Frontline Collections is the standout solution for Personal and consumer debt collection. They deliver debt collection for vets, dentists, medical debt, and private schools.

Top Tips for Businesses To Avoid Nonpayment of an Invoice

Federal Management’s Small Business Debt Collection Team experts provided guidance and tips. Prevention is always better than a cure, so here are some helpful tips.

  1. Make payment terms clear outset to avoid any confusion.
  2. Make it as easy as possible to pay unpaid invoices via a variety of payment methods.
  3. Use accounts software to automate reminders
  4. Have a clearly stated policy for late payments as a deterrent.
  5. Engage with the customer. Don’t be afraid to call them!

Waiting to act on unpaid invoices can present a considerable risk to any small business’s cash flow and business viability. By implementing simple measures such as these, late payments can be kept to a minimum.

This article was produced and syndicated by Wealth of Geeks.

Sam Allcock is the founder of PR Fire. His team help small to medium-sized businesses achieve coverage in publications like Yahoo Finance, Daily Mail, Metro, USA Today, MSN News, The Huffington Post, and The Telegraph through smart press release distribution.

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