Press Association
Sunday 12th February 2012
Businesses have doubled the amount of outstanding debt they are writing off with about £9 billion owed to them on any given day, a study showed.
Small and medium-sized firms wrote off an average of £2,529 in 2009, more than double the 2008 figure of £1,133.
About 720,000 small firms or one in six small businesses across the UK cancelled more debt this year than last.
The survey, part of Barclays Take one Small Step campaign, also disclosed that economic concerns over the downturn may have peaked. While one in five, or 18%, of bosses say late payers threaten their day-to-day survival, this is down from 32%, and only 26% are worried about the impact of late payments on their cash flow, compared with 61% in 2008.
"Writing off debt is a direct hit to the bottom line," said Steve Cooper, managing director of Barclays Business.
"It's an effective and pragmatic strategy, but it comes at a cost - lost revenue certainly, but there's also the significant investment of time and energy already spent chasing these debts.
"It's the opportunity cost that's perhaps even more concerning, as we will never know how businesses could have expanded or grasped new opportunities with this capital.
"Businesses are making a judgment call on whether it's better for them to keep on chasing debts, or to invest their resources elsewhere.
"Writing off debt should always be a last resort."
Tools such as sending legal letters, credit checks and monitoring credit worthiness help to avoid late payments, he said.
