Smaller companies do not have the finance or capability to take advantage of risk management services used by larger corporations, says new research.
The survey, conducted by the Forum of Private Businesses (FPB) and the credit agency Graydon UK found that 64% of smaller companies do not use services such as credit reports, credit insurance, debt collection and invoice discounting.
A further three quarters said they did not employ a credit management professional.
The report found that while small businesses do tackle cashflow problems, most simply do not have the budget to employ an individual to chase late payments, which can be detrimental to business success.
“Lack of resources often prevents smaller companies from employing a credit management professional, meaning that managers or owners are left chasing payments when they could be working more productively for their firm,” said David Roughley, chief executive of the FPB.
“As a consequence, businesses are leaving themselves open to abuse from late-payers, which affects cashflow and the health of the business,” he warned.
Martin Williams, managing director of Graydon, said problems caused by late payment culture would not vanish overnight. “It is vital that businesses take steps to protect themselves,” he warned.
However, he was also quick to point out the system does not currently work to the small business advantage.
He stated, “It would seem the businesses that need credit management services the most are not availing themselves of them. It is no wonder there is a cash crisis in the smaller business sector.”
© Crimson Business Ltd. 2007
