Small businesses are losing thousands of pounds every year due to unpaid bills, a new survey suggests.
Research conducted by Leeds University and credit insurers Atradius shows that on average, small businesses write off £14,000 of debt each year.
The Credit Management Research Centre (CMRC) report also found that more than one in five of all UK firms say bad debt is now a serious problem for them and a third describe late payment as a serious issue.
Many firms now have to wait long periods to get paid, with 39% admitting they often have to wait between 30 and 60 days after an invoice’s due date.
"The CMRC research has shown an increase in bad debt problems in recent months that are in line with the rising trends in personal and corporate insolvencies,” said Professor Nick Wilson, of the CMRC.
Will Clark, of Atradius, added: "It is no surprise that bad debt and late payment are growing problems for British firms, but the escalating impact this has on their bottom-line is significant.
"Even for a relatively small bad debt of £14,000, the average business would have to increase its sales 20-fold to cover the debt.
”For a larger firm, needing extra business of £1.7m to make up for a debt of £88,000, such a loss could seriously cripple cash flow and possibly even push them into insolvency.
”The number of insolvencies in the UK is steadily rising, so firms must have systems in place to minimise the risk of bad debt, or they could become another business failure."
