The Association of British Insurers revealed up to 50 businesses make claims per day for unpaid invoice insurance. Other stats produced by the ABI paint a bleak picture for UK business. With so many bad debts, UK businesses are facing a credit control crisis. With SMEs facing constraints in experience, staff and procedures, now is the right time to look for assistance.
Weekly debts of £5 million
The data produced by the ABI indicates over £251 million of trade credit insurance claims made in 2018. This average stands at £5 million per week across with 17,500 claims made throughout the year.
Business insurance, like any insurance, is ideally not employed. Making claims affects future premiums and can impact future cash flow. With so much unpaid debt piling up for business owners, a more permanent solution may be required.
AYOM understands many SMEs do not have the capability of dedicating a credit control department. This is especially true for sole traders and businesses with minimal staff. Non payment of invoices, while claimable on insurance, is best chased and resolved with the customers themselves. In 2016 alone, SMEs wrote off over £5.8bn of debt.
Recovering debt away from insurance
A key matter of credit control is both the means and experience. After an invoice has been unpaid after the terms agreed, business owners may be unsure of what steps are next. Does the case go straight to legal proceedings? Do you send more reminders in the hope of paying? What if the debtor is disputing the amount? Or disputing the debt at all?
Credit control requires persistence and the ability to take a firm stance. It can be done alone but for those with limited resources, debt collection could be a great long term solution. AYOM in particular work on a model of recovering charges and upfront fees from debtors. In B2B cases, legislation grants the right to recover charges. Even if a business debtor disputes this, law dictates that a creditor has every right to charge for fees incurred.
With fees payable by the debtor, this ensures you get your money back, plus the collector’s fees, putting you back where you should be at no additional cost. While insurance payouts are a quick means to an end, to protect your bonuses, outsourcing could be the answer for you.
To speak to a specialist adviser about debt collection, credit control or legal options, call 0800 130 3357. You can also email firstname.lastname@example.org. If you are an SME looking for an alternative to claiming insurance, look to build your credit control department today. If you are an SME looking for an alternative to claiming insurance, look to build your credit control department today.