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Businesses double debt write-offs in 2009

23/03/2010

In 2009, according to Barclays, businesses wrote off a lot of the debt they were owed - in fact, they wrote off more than twice as much debt as they had in the previous year.

The news actually refers to SMEs (small and medium enterprises). In February this year, the Survey Shop phoned 1,000 SME owner-managers (or senior decision-makers) on behalf of Barclays Business, putting together the 2009/10 Barclays Business Late Payments survey.

It found that companies wrote off, on average, £2,529 of debt last year - more than double the amount they wrote off in 2008 (£1,133).

Nonetheless, there is some good news. Only 26% of bosses were worried about the impact that late payments could have on their cash flow - down from 61% in 2008.

And while 18% said that their day-to-day survival was threatened by late payments, this was also down from the previous year, when 32% felt this way.

"Writing off debt should always be a last resort," said Steve Cooper, Managing Director of Barclays Business, who went on to say that 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," he continued, "as we will never know how businesses could have expanded or grasped new opportunities with this capital. Businesses are making a judgement call on whether it`s better for them to keep on chasing debts, or to invest their resources elsewhere."

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More than 4 million fear they`ll be made redundant 16/12/2010 - According to R3`s quarterly personal debt tracker, more than 4 Consumers took on more mortgage debt in July 26/08/2010 - Consumers took on £2bn more mortgage debt than they repaid Debts called in by parents 26/08/2010 - According to research, `the bank of Mum and Dad` is Teenagers `scared of debt` 19/08/2010 - Nearly two thirds of teenagers are `scared` of debt, according