Creditsafe, a business information provider, has released a new survey that shows that companies in the UK are stepping up their efforts to tackle bad debts.
According to the survey, one in four employers (http://www.ashbycohen.co.uk/employers.html intend) to take legal action in the next twelve months to enforce the recovery of outstanding debts. This hardline approach may be due to the fact that six out of 10 businesses believe that they will have to cope with an increase in defaulted payments in the coming year.
The survey also showed that one in five organisations are planning to introduce stricter penalties for late payment. Some even intend to charge interest at 100 per cent on overdue debts.
A spokesman for Creditsafe commented: "While enforcement of contractual penalties used to be a last resort, increasingly companies are embracing legal action as soon as payments slip beyond the timeframe set out in their terms and conditions.
"We could see the courts increasingly overburdened with claims and increasing numbers of involuntary insolvencies as firms demand immediate payment of outstanding invoices."
The results of the survey show that more and more businesses are prepared to take robust measures to protect their liquidity position, and that firms who actively pursue monies owed to them are more likely to secure payment that firms that simply sit and wait for debts to be settled.
In the majority of late payment cases, the matter can be quickly resolved without having to resort to a court case. Often, a letter from a solicitor detailing what further action could be taken if the debt is not paid will be enough to ensure the prompt payment of the overdue amount.
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