Debts owed to businesses soar past £1bn

The amount of business debt owed to UK firms has soared past £1bn, according to figures released by the Credit Services Association (CSA).

It shows that firms are finding it increasingly difficult to stay on top of credit control.

The CSA research shows that the amount of debt outsourced by businesses to collection agencies reached £1.145bn in the third quarter of 2012. That was a 12% increase on the second quarter figure of £1.02bn.

The total amount of debt owed to UK businesses at the end of 2011 was £0.9bn, showing that there was an alarming rise in debt levels throughout 2012.

Michelle Moore, B2B collections portfolio director for the CSA, said: “What seems clear from these figures is that businesses are increasingly seeing the use of third-parties not as a failure on their own part to collect the cash, but rather as an integral part of their credit management strategy.

“The only good customer is a paying customer, and while there is a perception that using a third party can impact future trade, the reality is somewhat different.

“There comes a point when a late payment turns into a potentially toxic bad debt, and that is when an external debt collection agency is at its most effective.”

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