Road haulage companies are chasing growing amounts of debt through the courts, according to debt recovery law firm Lovetts. The value of debt being chased through court claims in the first quarter of 2009 was 87 per cent higher than a year ago.
The evidence is the companies are also moving to chase debts more quickly. The amount of time these businesses are allowing between invoice and Letter Before Action (LBA) has reduced by ten days in the past year. LBAs are used to secure payment, or to obtain a response from a customer before the commencement of a legal claim. In Q1 2008 the average time between invoice and LBA was 82.5 days, in Q1 2009 the average time was 72.5 days.
In addition, the time between an LBA being issued to a claim being made through the courts has reduced by 4.5 days in Q1 2009 over Q1 2008. The figures from Lovetts also reveal a 71 per cent increase in the value of debt being chased through Letters Before Action.
Charles Wilson, chairman and managing director of Lovetts says: “Our findings demonstrate just how active road haulage firms have become in tackling bad debt. These businesses appreciate the risks of allowing late payments to become major debt issues. As such, they are acting on both longer term arrears, and current outstanding payments which is increasing the level of debt chased. This proactive approach to credit management is essential for businesses to survive during these tough economic times.”