Credit management and debt collection company Daniels Silverman has seen a staggering 1575% increase in the number of enquiries it has received from businesses in the automotive sector from June 2010 to June 2011 signifying a massive deterioration in business conditions for the industry.
Daniels Silverman managing director Carole Hughes says:
“An increase in enquiries regarding debt recovery on this scale shows that operators in the automotive industry are really feeling the squeeze. Cashflow has become paramount to businesses’ survival.
“Good practice in effective credit control includes prompt invoices, accurate statements explaining exactly when payment is due and regular liaison by phone when payments are late.
“It is essential to perform credit checks when providing credit. Daniels Silverman recommends checking out directors personally and asking for personal guarantees if there are irregularities. We also advise reviewing credit limits regularly and watching out for signs of fraud – we often see cases where a company has placed a few small orders and paid with cash and then asked for much larger credit orders before absconding or becoming insolvent.
“Finally don’t stop chasing. Many SMEs are not aware they have six years to pursue debts even if they have been written off. And even if a debt has been written off, it is worth continuing to chase the debt, if collection is subsequently successful any VAT claimed can be repaid.”