SMEs Turn to Litigation as the Credit Crunch Bites

Posted: Friday, 5 December 2008 @ 12:40

SMEs are turning to litigation in ever increasing numbers to collect in debts.

According to research undertaken by the Credit Management Research Centre, 2,000 such cases were brought in September 2008, compared with just 1,500 in January 2008.

This is a clear indicator of generalised cash-flow issues within SMEs. The research also shows that the property and retail sectors have been particularly badly affected, with the amount of cases brought in these sectors rising an incredible fivefold in the last two years.

Reports earlier this year showed that, overall, money owed to SMEs in the UK rose by £2.6 million in 2007 and now stands at £18.6 million.

This research sends a clear message to SMEs to tighten up on cash-flow management and credit control generally. Although court proceedings can be effective, they really should be seen as a last resort.

All companies should consider a Zero Tolerance Approach to Bad Debt and how much of this approach could be adapted to help them survive and thrive during the recession.

Gary Cousins, Business Lawyer

Blog by Gary Cousins
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas. View profile
Call Gary on +44 (0)121 778 3212 or by email
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.

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Thank you. Your response is great, very straight to the point! Hopefully this will bring an end to the matter. I will certainly be recommending your services as I am very impressed with the prompt dealing of this matter.
Janet Burbidge

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