Small businesses owed £5 billion

Bad debt has affected nearly half of all SMEs, according to research from business services firm CreditPal. The firm estimates this could total around £5.3 billion in debts.

Over the last two years 43 per cent of small businesses have been left with an average of £7,500 owed to them as a result of trading partners or customers going bust. The firm estimates this could total around £5.3 billion in debts.

Chris Poll, CEO of CreditPal, says: ‘The amount left owing to SMEs as a result of company liquidations is shocking and threatens the survival of some UK businesses. It is imperative that companies take every step to mitigate their exposure to the risk of defaulted payments, especially as the economy climbs out of recession when the need for cash is even greater.’

Of the 540 small businesses surveyed, London-based SMEs were worst hit by defaulted payments, with those in Scotland faring the best.

According to chartered accountants HW Fisher & Co, the number of businesses going bust is expected to rise dramatically later this year.

The total amount of company insolvencies was 19,077 in 2009, compared to 15,535 in 2008.

www.smallbusiness.co.uk

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