Companies of all sizes should act swiftly to recover money owed and ensure their survival from the fallout of Covid-19, warn specialist debt recovery lawyers.
Experts at Yorkshire law firm Lupton Fawcett say some businesses have been reluctant to chase debts, preferring to give customers more time to pay their bills or offering more generous payment terms.
With many companies also likely to be hit by the closure of the furlough scheme at the end of October, lawyers say now is the time for SMEs in particular to be proactive and recover debts to see them through the coming months.
Robert Barnard, client services principal in debt and business recovery at Lupton Fawcett, said: “Many SMEs know the issues but are being slow to do anything about it, recognising that other companies are facing difficulties too. Recent figures suggest 50% of businesses are facing serious problems because they are not being paid.
“We are at the business end of the year and now is the time for companies to act to ensure they have the best chance of survival.”
SMEs are urged to employ a debt specialist law firm rather than a debt collection agency. Robert explained: “Knowledge of the law and the ability to issue legal proceedings provides us with added weight and leverage that debt collection agencies do not have.”
Lupton Fawcett is also supporting larger companies to recover debt, providing a ‘trace and investigation’ service which ensures corporates have the correct customer data to enable them to recover debts often going back for several years.
Robert added that the use of debt purchase was likely to increase in the next 12 months as bigger companies look to recover money during a difficult time for many sectors.
He said: “Commercial enterprises will look to sell off their debt to at least get some of their money back in which will help to support them during the coming months.”