A new survey by Company Check has found that 68 per cent of all businesses in the UK have had to write off bad debt, but only a third have insured themselves against it.
1.4 million businesses suffering
After reviewing the figures, the Federation of Small Businesses (FSB) confirmed that this could mean as many as 2.8 million companies have found themselves exposed to this financial difficulty and over 1.4 million were not protected against the subsequent loss.
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UK Business culture to blame?
The development manager for the FSB thinks that these financial risks could stem from a cultural problem within UK business. According to her, small firms lack the confidence to charge interest and complain about late payments
“The fear among the smallest companies, particularly when dealing with larger firms, is that complaining about a late payment could result in lost future work which will harm cash-flow for their business.” She said when commenting on the survey.
Unpaid debt can sink small companies
Chloe Webber, the operations director for Company Check, thinks the problem isn’t fear but a naive attitude to financial risk “half of all the companies we spoke to believed their business was entirely free from financial risk.” She said.
However, the reality is rather different. “The consequences of being uninsured and then suffering from a bad debt can be severe.” she continued. “For many small businesses, prompt payment from their customers can be the difference between prosperity and failure.”
Is fear to blame? Naivety? Something else entirely? Sound off in the comments section below to have your say