Small firms turning to county court judgements in fight against late payment
The volume of county court judgements (CCJs) used by small business owners to chase outstanding invoices increased by 23 per cent in the second half of 2015, according to new research by fintech startup Ormsby Street.
The data also revealed that the average value of a CCJ pursued by an SME is now 4, 619. Late invoice payment is fast becoming the scourge of small business in the UK, causing cash flow issues that can impact growth and even the very existence of a business, said Martin Campbell, Ormsby Street managing director.
almost 5, 000 is a significant amount for any small business to have to go to court to chase, and it is hugely unfair that a small business should have to spend its precious time and resource on chasing payment for work that has already been delivered, he added.
Additional research into the UK’s late payment problem in July 2015 by direct debit provider Bacs revealed that the monthly cost of chasing money owed is increasing for small businesses. The firm owners surveyed were paying an average of almost 1, 000 each month trying to get debtors to cough up while industry-wide costs had increased by one quarter in the 12 months prior to the study.
Invoicing network Tungstenreleased further data in August 2015 showing that more than one in five firms had faced insolvency due to payment problems.
The issue of late payments was debated by politicians in a Westminster Hall debate on 27 January with Conservative MP Alok Sharma calling them one of the biggest drags on small business.
Minister for small business Anna Soubry called on government departments to lead by example on the matter. I have seen evidence that by the time something that looks like a government contract has come through the first subcontractor, the next subcontractor and the next one, the payment terms are something in the region of 120 days, and I am concerned about that, she said.
Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics as well as running a tutoring company.
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