Small firms 'better at risk management'
May 07 2009
Smaller companies tend to be more effective at managing their financial risk, according to Close Invoice Finance.
Research from the financial services provider quizzed more than 500 small and medium-sized enterprises (SMEs) and found that the smaller the firm the less ageing debt, or payments which are owed for more than 60 days, they have on their books.
Three-fifths of firms with between one and 50 employees have ageing debt levels of less than ten per cent, while 40 per cent of those with between 100 and 249 workers maintain this level.
Furthermore, the vast majority of larger SMEs revealed between 11 per cent and 50 per cent of their debt book comprises of settlements owed for more than two months.
David Thomson, chief executive of Close Invoice Finance, comments: 'This study proves that smaller SMEs have been more successful than their larger cousins at successfully managing exposure to the risk of bad debt.'
He also stresses the importance of supervising cash flow in the current economic climate.
Last month, John Wright, national chairman of the Federation of Small Businesses, highlighted the need for trade credit insurance, noting that it protects firms from other members of their supply chain failing to pay.
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