Bad debts have risen for nine of out ten companies according to research by credit information provider Creditsafe.
It said 91 per cent of UK companies polled in October had seen an increase in defaulted payments from creditors in the last year and one in ten (10.4 per cent) saw this increase by over 20 per cent in the last 12 months.
In fact, despite whispers of recovery, over half of UK businesses (56 per cent) told Creditsafe they are more concerned about late and defaulted payments than they were at the height of the financial crisis. A staggering four per cent of UK enterprises are awaiting payment of at least £100,000 from creditors. One in ten companies (9.7 per cent) has bad debts on the balance sheet that equate to at least 20 per cent of their annual profits.
David Knowles, business development director at Creditsafe, said: "The ability of the UK economy to rise out of recession may be strangled by bad debt. Many companies are carrying huge levels of debt on their balance sheets, which if not recovered could see a dramatic increase in businesses entering administration. As credit has become increasingly expensive and restricted, businesses are now struggling to contend with such high levels of debt and a greater number of defaulted payments."
Six in ten (63 per cent) of UK businesses have taken steps in the last 12 months to help mitigate their exposure to bad debt and reclaim monies owed. The most popular method has been increased debt collection activity, with firms increasingly litigating to force creditors to pay out.
It said 91 per cent of UK companies polled in October had seen an increase in defaulted payments from creditors in the last year and one in ten (10.4 per cent) saw this increase by over 20 per cent in the last 12 months.
In fact, despite whispers of recovery, over half of UK businesses (56 per cent) told Creditsafe they are more concerned about late and defaulted payments than they were at the height of the financial crisis. A staggering four per cent of UK enterprises are awaiting payment of at least £100,000 from creditors. One in ten companies (9.7 per cent) has bad debts on the balance sheet that equate to at least 20 per cent of their annual profits.
David Knowles, business development director at Creditsafe, said: "The ability of the UK economy to rise out of recession may be strangled by bad debt. Many companies are carrying huge levels of debt on their balance sheets, which if not recovered could see a dramatic increase in businesses entering administration. As credit has become increasingly expensive and restricted, businesses are now struggling to contend with such high levels of debt and a greater number of defaulted payments."
Six in ten (63 per cent) of UK businesses have taken steps in the last 12 months to help mitigate their exposure to bad debt and reclaim monies owed. The most popular method has been increased debt collection activity, with firms increasingly litigating to force creditors to pay out.