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SMEs turn to courts to conquer bad debts

Apr 20 2011

County court judgements are used by 55 per cent of businesses

County court judgments are the measures most commonly used by businesses to combat late payments, research finds.

The procedure is used by over half (55 per cent) of businesses surveyed in a study by commercial credit referencing agency Graydon UK.

Some 42 per cent of businesses are contracting third party debt collectors and 39 per cent setting up formal voluntary arrangements with debtors as they step up efforts to recover money owed to them.

Nearly a quarter of UK businesses have issued fewer winding up petitions over the past year despite 66 per cent of firms claiming they have been taking a tougher approach to dealing with debtors.

The latest UK government insolvency statistics have shown that corporate liquidations continued to fall during the fourth quarter of 2010 and have remained at far lower levels than in previous recessions.

Graydon UK head of external affairs Martin Williams says, ‘While businesses are taking a harder line against bad debts almost a quarter say that they are not petitioning to wind up companies as a route to recovering money owed to them. This indicates when it comes to the crunch and creditors start to turn the screws debtors can and do pay up.’

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