Small business compensation claims for late payment increase in last two years
26th June 2013 | News
The percentage of SMEs claiming for late payment that include compensation, has risen over the last two years, according to new research by debt recovery law firm, Lovetts.
In 2010, just a quarter of claims handled by Lovetts included compensation, rising to 31 per cent in 2012 and 33 per cent since the turn of 2013.
The firm believes that many small businesses are missing a trick in claiming compensation because they failed to lay down any firm ground rules at the outset of new business relationships.
Subsequently, Lovetts urges businesses to take a tougher line on late payments and, if necessary, use the legislation that’s already available to them.
The onus is on small firms to ensure the customer is aware of the legitimate costs, compensation and interest that will be incurred in the event of late payment.
Charles Wilson, CEO of Lovetts, said: "New late payment regulation was introduced in March but based on the poor use of existing legislation; I have very little faith in the EU directive making any impact on late payment practices.
"It comes down to business relationships and ensuring that in the early stages SMEs make clear that they won’t stand for any delays and will claim costs if necessary.
"With suggestions that the economy is starting to pick up, we would urge the small and medium-sized firms to tackle the issue of payment upfront as new customers come on board. Don’t let it become the elephant in the room."
Greater London firms suffer most out of all UK regions from late or failed payments from customers (41 per cent), significantly higher than the national average of 24 per cent as published in a study by Santander Corporate & Commercial.