CCJs on the rise

New figures suggest SMEs are increasingly pursuing legal means to chase late payments

Small businesses are increasingly pursuing County Court Judgements (CCJs) to chase bad debt, new figures have claimed.

The number of CCJs brought by SMEs against late-paying customers rose by 23 per cent sequentially in the second half of 2015, according to fintech start-up Ormsby Street.

Based on analysis of its 27,000-strong customer base, Ormsby Street also found that the average value of a CCJ pursued by UK SMEs in 2015 was £4,619.

"Late invoice payment is fast becoming the scourge of small business in the UK, causing cashflow issues that can impact growth and even the very existence of a business," said Martin Campbell, managing director of Ormsby Street.

"Almost £5,000 is a significant amount for any small business to have to go to court to chase, and it is hugely unfair that a small business should have to spend its precious time and resource on chasing payment for work that has already been delivered."

Ormsby Street's findings come after research last month concluded that more than half (53 per cent) of UK SMEs are experiencing issues with late-paying customers.

One in five are owed more than £25,000, the research from Zurich found, one in 10 are owed £100,000 or more, while one per cent are waiting for over £1m.

Zurich said many SMEs are concerned about enforcing their strict legal rights due to fears over losing future business.

New government measures are being introduced to tackle the issue, however, Zurich added.

"These include the creation of the Small Business Commissioner – a new authority charged with addressing power imbalances between small and large firms, including instances of 'supply chain bullying' and late payments. There is also the offer of a mediation service to resolve late payment disputes quickly, and at a fraction of the cost of going to court," it said.