The UK’s small and medium sized enterprises wrote off a combined £5.8bn in debt last year, equating to more than £21,000 a day – according to research from Direct Line for Business.
Around 19% of small businesses claimed to have written off debts at an estimated average loss of £31,330, with 9% of respondents saying they had written off more than £100,000.
Suppliers becoming insolvent and unable to pay what they owed (29%) was the biggest reason for writing off debts, followed by those that thought suppliers didn’t have sufficient funds to pay their debt (17%), not having the time to chase debts and not having the funds to chase debts (both 11%).
Not wanting to damage a future relationship with a customer (10%) and not understanding how to go about reclaiming owed payment (3%) were also cited as reasons for writing off debts.
The study also found that 82% of small businesses are currently owed outstanding payments, with the average business owed £62,957.
It comes weeks after research from Paym revealed that the UK’s sole traders are being hit with up to £8.1bn in abandoned late payments.
Nick Breton, head of Direct Line for Business, said: “With more than a million small businesses based across the UK, these enterprises really do make up the backbone of the British economy.
“However, it is alarming to see just how much hard work goes unrewarded, especially when considering that many small businesses appear reluctant to chase debts, with reasons ranging from thinking that the client may not be able to afford the cost to damaging their relationship.
