SMEs must recognise early warning signs of bad debt

Research in the credit arena continues to point to the fact that SMEs should be doing more to protect themselves from bad debt, and protracted payments from customers. I read some research over the weekend  suggesting that 50% of SMEs continued to deliver goods on credit terms to debtors when unpaid debts were already over 90 days old. Secondly, only 3% of the respondents in this study said they turned to a debt collection agency for help, but when they did, debts were already on average 11 months old. The interesting aspect of this research was that it was looking into trade supplier habits involving companies that had gone bust leaving those suppliers with write offs. Once again, it looks as if there is an imbalance between SME enthusiasm for chasing sales revenue, and unwillingness or lack of expertise in making sure those sales are paid for.   

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