Reports suggest the end of the recession is in sight, and according to new figures from Lovetts, the debt recovery law firm, it has pushed freight haulage firms into dramatically speeding up their debt recovery processes.
The figures show a significant decline by freight haulage businesses in the amount of time they will tolerate waiting for payment, and it is clear that there is less of a reticence to threaten legal action too promptly after the usual 90 day credit limit.
Compared to Q3 last year, freight haulage firms are now chasing up debts with a Letter Before Action (LBA) an average of 19% sooner and legal claims are being issued just over 3% quicker compared to Q3 2008. However, the most encouraging figure is that of the value of debts owed in the freight haulage sector, which has fallen by 40% year on year.
Charles Wilson, Chairman and Managing Director of Lovetts commented: By necessity, businesses are keeping a closer eye on their cash flow and changing their debt recovery processes to keep the cash coming in but this must also be balanced with the need to maintain good customer relationships. Its a really tough balancing act for many businesses particularly SMEs who simply dont have the luxury of bank overdrafts to provide security when a customer fails to pay up.
Whilst its great to see these businesses are acting sooner and are owed less in debts, there is still a large amount of room for improvement. It only takes one customer to pay a larger invoice a few months late to seriously affect a business cash flow and put its future at risk. Its vital therefore that a robust debt recovery process is in place to help ensure 90 days doesnt become any longer reaching the point at which recovery will inevitably be both protracted and expensive.