Having accurate and reliable customer financial information reduces bad debt and the time you spend dealing with it. It also gives you the detail and time to better engage with new customers. In turn, this allows you to stabilise your cash flow, protect your balance sheet against bad debts, expand sales, boost your borrowing power and confidently develop new markets. Credit insurance is one of the few insurances that works not just for tomorrow; it helps you to grow and protect your business today.
The total sums owed to Britain’s small and medium-sized enterprises have reached a record high of 35.3 billion, according to research to be published. Bacs payment schemes, the organisation that runs the clearing and settlement of automated payments including direct debits, said that the total outstanding to SMEs had risen by 2 billion during the past six months.
The Insolvency Service said the number of businesses going into liquidation rose to 4,303 in the first quarter of 2012 insolvencydirect.bis.gov.uk, a 4.3% increase compared to the same period last year and a rise of 0.2% on the previous three months.
Despite the rising insolvency rate, fewer than half of SMEs actively credit check new customers. The latest rise in corporate insolvency as reported by the Insolvency Service has reaffirmed that it is vital for businesses to be cautious when offering credit to firms. Hilton-Baird Collection Services’ most recent late payment survey highlighted that late payment remains an issue for small businesses. However, despite the rising insolvency rate, fewer than half of respondents actively credit checked new customers (47%) in the second half of 2011, with fewer than one in three credit checking existing customers (30%).
The consequences of late payment are well documented, with the annual survey additionally finding that businesses had to wait an average of 17 days beyond their agreed credit terms to be paid in that period. A result of this is that 32% of businesses now classify more than 10% of their debtor book as bad debt. Unfortunately, late payment has also had a knock on effect down the supply chain which only exacerbates this problem further. Well over half of businesses admitted to paying their suppliers later (59%) as a result of their customer paying an invoice late.