Bad debt ‘could cause more firms to go under’

Online credit checking firm e-Business Credit Manager (e-BCM) believes that firms with up to 20 employees are most at risk since they lack the necessary tools to reduce their risk of debt and to follow up outstanding repayments.

Dennis Scott, commercial director at e-BCM, commented that the problem of inflationary pressures and business costs will mean that the predicament of late repayments “will deepen” in 2007.

Mr Scott told IT Week: “The smaller the business the less likely it is they will have time to carry out credit checks or chase up debts and we believe that with rising costs and inflationary pressures putting the squeeze on businesses, this year could see many more smaller businesses getting into trouble due to bad or late payers.”

He consequently advised firms to make sure they run credit checks on new customers and that they chase up any outstanding debts.

In related news, KPMG recently announced that too many people have debts that they “have no realistic” of repaying following its statement that it has had to write off a record of £1.4 billion in bad debts.