Fear of litigation costs SMEs £250bn
British SMEs are missing out on billions of pounds because a fear of costs has stopped them taking legal action, according to a new survey.
The research, conducted by Annecto Legal, estimates that an average of £172,000 in damages have been lost per company, the equivalent of £250 billion across the UK.
Encouragingly, an overwhelming 70% of businesses have not had to pursue a potential legal case in the last five years. In fact, only one in five SMEs have ever been involved in litigation. Of those that have, however, almost half reported they had to finance their case on an hourly rate basis, which for many small businesses can be crippling.
The main reasons listed for not pursuing legal action were: because it’s too expensive (15%), because of the time it takes (14%) and fear of losing (10%).
But, worryingly, the findings also showed that 28% of firms have felt bullied by a larger company or corporation when concerned with general business matters.
This is very concerning when it comes to late payment. In 2013 alone 56% of businesses wrote off more than 1% of their turnover as uncollectable, according to our research. This highlights the importance of standing up to late paying customers to get what you’re owed.
Taking legal action to recover an unpaid debt can be a daunting process for businesses of any size, and yet continuing to chase in-house may not have the weight required to persuade customers to pay.
As a debt collection agency, Hilton-Baird Collection Services can act as an effective halfway house. Our approach is focused on bringing a successful resolution without the need for litigation, utilising our experience and know-how to secure payment. But if the legal avenue does need to be explored, we will work with you through the relevant stages, up to and including enforcement.
With the comfort of a fixed, up-front fee – which we will agree with you at the outset – you will immediately know how much this course of action will cost and how long it will take.
For more information on how Hilton-Baird can assist, contact our award-winning team on 0800 9774848 or email firstname.lastname@example.org.