Less than a quarter of small and medium-sized enterprises (SMEs) have ever taken legal action to recover outstanding debts, claims a survey.

Less than a quarter of small and medium-sized enterprises (SMEs) have ever taken legal action to recover outstanding debts, claims a survey.

This is despite the fact that 77 per cent of respondents are aware of their legal right to charge debtors interest on unpaid invoices, according to the research among 300 SMEs from invoice finance provider Cattles.

When asked the reason for this reluctance to pursue legal action, one respondent states, ‘I wouldn’t want to do anything to put pressure on [customers] in this way in case it negatively affected the relationship’.

Doug Crawford, group MD at Cattles, says, ‘Now more than ever, it is important that SMEs understand that there are ways of successfully managing the careful balance between prompt payment and happy customers.’

Adds Crawford, ‘If invoices aren’t chased, many companies will take advantage of the situation and avoid making payment, particularly when money is tight.’