Small and medium sized enterprises (SMEs) wrote off nearly £6 billion of debt last year, a survey reveals.
The research, conducted by Direct Line for Business, investigates the leading problems faced by SMEs when claiming the money they are owed.
According to figures, more than 80 per cent of the SMEs interviewed had balances outstanding from their debtors, with the average business estimated to be owed around £62,957.
One in five SMEs claim to have written off debt worth approximately £31,330, and one in ten have written off debts in excess of £100,000.
When asked why their business had decided to write off unpaid debts, 29 per cent of respondents said that a supplier had become insolvent, and was unable to pay the monies owed, and 17 per cent said that they did not think the supplier would have sufficient funds to cover the debt.
Nick Breton, head of Direct Line for Business, said: “With more than a million SMEs 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 SMEs 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.
“All of these debts add up and with nearly 7,000 companies estimated to have entered liquidation in the first half of 2016 alone, the potentially disastrous knock-on effects of writing off monies owed are clear.”