The number of small businesses failing due to clients not honouring debts looks set to increase this year, it has been claimed.
According to credit check firm e-bcm, small firms will bear the brunt of increased pressure from bad debt and late-paying clients, caused by the current economic climate.
“We believe that with rising costs and inflationary pressures putting the squeeze on businesses, this year could see many more smaller businesses getting into trouble due to bad or late payers,” said Dennis Scott, commercial director of e-bcm.
Britain’s smallest companies are more likely to be confronted by late-paying clients, e-bcm has claimed, yet small businesses and start-ups often rely more heavily on cashflow security.
A recent survey conducted by software company Mamut found that more than half of firms with fewer than 20 staff suffer from late payments, whereas only 29% of those with between 20 and 50 staff have similar problems.
Most of the estimated 750 businesses that currently fail on a daily basis in the UK are smaller firms, according to credit checkers at e-bcm, who argue that small businesses find it difficult to access the resources that enable large companies to reduce their risk or chase up debts.
“The smaller the business, the less likely it is they will have time to carry out credit checks or chase up debts,” said Scott.
© Crimson Business Ltd. 2007
