SMEs losing out to customers’ unresolved debt
Recent stats from data company Experian has shown that SMEs have lost over £10,000 each as a result of regular customers going bust. Research suggests that whilst over half of those surveyed said they check their customers' and suppliers' credit ratings annually, this is not often enough to identify possible problems.
Mike Solomons, Partner, BM Advisory comments:
Businesses of all sizes can encounter credit control issues and mounting outstanding debts can cause operational issues and reduce profit. Small and medium sized business owners are particularly susceptible, as their businesses too can fail if customers are unable to settle their debts.
As Experian’s report indicates, 34 per cent of business owners surveyed admitted to only starting to monitor credit ratings once they had already lost money.
It is essential for SMEs to safeguard against losses by having structured systems in place to monitor credit ratings on a regular basis – particularly in the current climate where, just yesterday, The Independent reported that additional research has shown that in the retail sector shops are shutting down at a rate of 18 a day across Britain.
By conducting thorough reviews of clients’ credit management functions and establishing improved operations through restructuring, business advisory and recovery experts will help businesses identify and resolve any credit related challenges and implement effective debt recovery strategies.
•Improving cash flow through improved bad debt recoveries
•Reducing bad debt, thereby improving profitability
At BM Advisory, we work closely with a number of partners able to act in a cost effective and hassle-free manner to recover the money businesses are owed, tailoring our approach to each business’ individual requirements. In turn, we regularly advise directors and creditors in dealing with their responsibilities and legal requirements in times of distress.
If you or a client of yours is encountering credit related challenges and you suspect the business is heading towards financial difficulty, contact an expert such as BM Advisory as soon as possible. By seeking advice early, you will not only protect yourself or your client as a director, you will also increase the options for business rescue and recovery.