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The Small Business Owner’s Guide to Risk Free Debt Recovery

According to new research, there has been a sharp increase in the number of small business owners and those who are self-employed slipping into debt.  These people compromise around 15% of the UK’s total employed population so this is an alarming development as the British economy relies so heavily on small to medium businesses which account for more than 99% of all private sector business.  In fact, total employment within the small to medium enterprise sector stands at 60% of all private sector employment, or a massive 16.3 million British workers.

The research reveals that 49% of those who contact Business Debtline (a dedicated SME advice service) were struggling with debts of £10,000 or more while 23% owed more than £30,000.  Some of the key problem areas identified by the report include issues such as lack of business management skills, low and variable incomes, and late payment from clients or customers. 

As we’ve pointed out here at ACM so many times in the past, a steady cash flow is vital for small businesses and one of the main risks to cash flow comes from late paying clients.  It seems so unfair that many small businesses here in the UK are driven to insolvency by late payment issues, despite the business owner’s dedication to managing their finances in a responsible manner.  For a small business, just one or two late- or non-paying clients can lead to disaster for the business.  Whether the negative effect is insolvency or the inability to increase their business due to lack of funds, having your business so adversely affected by the actions (or non-actions, in the case of late- and non-paying customers) is a frightening prospect.

When it comes to recovering money owed to your business, there are several options available to business owners, including using the small claims court.   The small claims court was originally created to enable people with no legal qualifications to take an individual or company to court.  Although the process is fairly simple, there are fees involved which need to be considered in order to ascertain whether or not this is a financially viable option.

Another method of recovering money owed by debtors is to engage the services of a debt collection agency.  The advantage of this approach is that a professional debt collection agency has the experience and expertise necessary to make a successful outcome more likely.  However, many business owners are put off using this approach as they may think it will be an expensive process and they are reluctant to spend more money on attempting to recover a debt which may still not be repaid.

This is why some debt collection services nowadays are offering their services on a contingency basis – that is, they operate on a no win, no fee basis.  This means that you don’t have to risk spending more money on a fruitless attempt to get paid.  It’s also the case that any debt collection agency that offers a no win, no fee service is likely to have confidence in its ability to recover the money owed to your business – they would not offer to do so otherwise.  This is currently one of the most popular methods among business owners who are owed money to deal with non-paying customers as it is virtually risk-free.