Credit management professionals want protection for SMEs

The number of UK firms seeking insolvency advice could fall if small and medium enterprises (SMEs) are given more protection against late payment.

This is the feeling of the majority of credit management professionals, according to a recent survey.

Research from the Institute of Credit Management and Equifax found a 59 per cent increase in the number of late payments in 2010, although the rate of growth fell to 52 per cent this year.

More than a third (36 per cent) of businesses are attempting to avoid needing the advice of insolvency practitioners by to chasing up late payments three days earlier than they did 12 months ago.

A further 20 per cent are chasing them up four days sooner, showing cash flow issues are important for many enterprises.

Almost two-thirds (65 per cent) of members said the government should offer more support to protect SMEs from the negative impact of late payments.

Institute of Credit Management chief executive Philip King explained that late payments are a big issue for many businesses.

"Late payments continue to put businesses under added strain in an already fragile economy," he said.

"The survey shows that businesses are struggling to tackle late payments and the majority would like government support, but it is also up to professional credit managers, and specifically members of the Institute of Credit Management, to take the lead in reducing the impact of bad debt and improving levels of best practice."

Meanwhile, Debt Advice Foundation managing director David Rodger recently claimed that an increasing number of people are struggling with debt and could need insolvency advice in the coming months.

"More and more people are struggling and government funding is drying up, meaning that the role of a self-funding charity like the Debt Advice Foundation becomes increasingly important in today's society," he said.