The Experian survey of more than 600 SMEs found that 76 per cent lost money because of their customers failing, and many were failing to carry out thorough credit checks before it happened.
A quarter said they only checked new customers’ credit rather than regularly, and more than a third only began to check after they had already lost money.
Ade Potts, Managing Director, Experian’s SME business, UK&I, said: “ Waiting until you’ve lost money to do credit checks is a bit like shutting the stable door after the horse has bolted. Unless businesses check the credit status of their customers at least once every six months, they risk exposing themselves to further loss.”
“The rate of deterioration is far quicker for companies in today’s climate, so the sooner you can spot the signs of financial stress, the sooner you can react.
“On-going monitoring, addressing financial issues such as late payment of invoices head-on and not relying on one big customer or supplier will help lessen the risk of further losses as a result of insolvencies.”
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