Two thirds (65 per cent) of debt recovery specialists have noticed a substantial rise in the number of SMEs chasing large debts over the past 12 months, according to a survey by find-a-solicitor service Contact Law.
More than a third (36 per cent) say they have seen at least a 50 per cent rise in the number of SMEs coming to them to chase outstanding debts. Almost all the law firms surveyed (94 per cent) had observed at least a 10 per cent rise in the past 12 months.
In terms of average debt that specialists are being asked to recover, 41 per cent are between £5,000 and £10,000, with almost one fifth (19 per cent) being asked to recover debts of more than £10,000.
Almost a third (31 per cent) of debt recovery solicitors say they have noticed an increase in the individual amounts they are being asked to recover, with just under a quarter (23 per cent) revealing they have seen a 30 per cent increase in the average value of debts.
Even SME owners who turn to solicitors to recover debts will still have to exercise patience before they see any money. For those cases that are successful, more than 36 per cent take six months or more to recover the full debt, with 70 per cent of cases taking up to four months.
When respondents were asked if, over the past 12 months, they had noticed it was taking longer to recover debts, more than half (55 per cent) agree it was. Four out of ten solicitors (42 per cent) claim it took around 30-35 per cent longer to recover debts than a year ago.
Dan Watkins, director of Contact Law, comments, ‘SMEs are notoriously time-poor and chasing payments can be incredibly time consuming and frustrating. Businesses that have clear payment terms, send invoices out on time and actively chase late payments are doing all they can to keep cash flow moving. However, after that, the responsibility lies with their client or customer to pay the agreed sum on time.’