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Published: 09:00, 25 July 2014 |
Updated: 10:31, 25 July 2014
The average small business in Kent is owed £800,000 - suggesting many are still under strain despite the economic upturn, according to new research.
Although firms in the county have a trade debt of less than the national average of £1.3m, companies in Dartford are owed the most in the county at £1.4m.
Businesses with fewer than 10 staff and a turnover of less than £2m were the hardest hit, with £51,000 owed to them for goods and services paid for on credit.
Some 10% were considered in severe trouble with debt reaching a third of annual turnover, said the findings by commercial debt recovery firm Debt Guard Solicitors.
Companies in Rochester were next worse off, waiting for £772,000 in unpaid bills. Next up was Bromley at £673,000 and Canterbury at £640,000.
Tonbridge SMEs had the least trade debt on average at £600,000.
The research was based on official account details submitted to Companies House by 366 small and medium-sized enterprises in Kent.
Debt Guard Solicitors chief operating officer Mark Burgess said: “This research highlights the financial headache caused by outstanding and unpaid bills.
“It is clear that Kent’s smaller SMEs in particular need much greater support in this respect, as many are facing the very real threat of closure due to trade debt pressure and late payment.
“Our message to all of Kent’s SMEs struggling with late payment is ‘don’t write off your debt’.
Look at legal ways to professionally recover it as, by improving credit flow, this will help put your business on a more stable financial footing.”
The average time it took Kent firms to receive payment from customers stood at 28 days for micro-SMEs (fewer than 10 employees), 47 days for small companies and 35 days for medium-sized enterprises.
This was much better than the national average of 50 days.
Federation of Small Businesses (FSB) chairman for Kent and Medway, Roger House, said companies need to improve their credit control but also called on the Government for help.
He said: “We have to do three things. Businesses have to tighten up their processes and have more guts to chase the money.
“We need to name and shame if it comes to it, which should encourage those who owe the money to be honest and ethical and pay their bills.
“Finally, we need to be backed by the Government so companies are not frightened of chasing their money.
“Often companies are too frigthened to get nasty because they are worried they will lose a customer.
“We would welcome legislation that guarantees the right to charge interest on late payment.”
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