Lovetts, one of the UKs leading debt recovery law firms has revealed a huge increase in the volume of bad debt being pursued for payment by road haulage companies. The value of debt being chased through court claims has increased by a staggering 87% Q1 2009 vs Q1 2008.
The figures suggest that road haulage companies are acting quickly and decisively in recovering debt during the recession. This is evidenced in the fact that the amount of time these businesses are allowing between invoice and Letter Before Action (LBA) has reduced by 10 days in the past year. LBAs are used to secure payment, or to obtain a response from a customer before the commencement of a legal claim. In Q1 2008 the average time between invoice and LBA was 82.5 days, in Q1 2009 the average time was 72.5 days.
In addition, the time between an LBA being issued to a claim being made through the courts has reduced by 4.5 days in Q1 2009 over Q1 2008. The figures from Lovetts also reveal a 71% increase in the value of debt being chased through Letters Before Action.
Charles Wilson, Chairman and Managing Director of Lovetts says: Our findings demonstrate just how active road haulage firms have become in tackling bad debt. These businesses appreciate the risks of allowing late payments to become major debt issues. As such, they are acting on both longer term arrears, and current outstanding payments which is increasing the level of debt chased. This proactive approach to credit management is essential for businesses to survive during these tough economic times.