SMEs urged to take out debt insurance
Published On 16 January 2007 at 16:16:32
SMEs are being urged to protect themselves against bad debt.The advice from business leader Ultimate Finance comes ahead of a predicted rise in bad debt and insolvencies.
Ultimate Finance's regional director, Andy Johnson, told the Manchester Evening News that SMEs are already "struggling under the burden of late payment", adding that one in four business failures can be blamed on bad debt.
"The SME sector is often the first and hardest hit, and even one major customer becoming insolvent could have a catastrophic affect on a business," he warned.
Ultimate Finance advises all SMEs to take out credit insurance as well as carrying out adequate credit checks before accepting a new customer or supplier.
Following last week's sudden interest rate hike, there are renewed fears that bad debt levels will rise further.
According to the Confederation of British Industry, 30 per cent of banks and 78 per cent of building societies expect to see a rise in bad debt in the first quarter of 2007.
"There have been a number of predictions relating to a rise in bad debt and insolvency this year, and there is no doubt that businesses are under increasing strain," concluded Mr Johnson.
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