As economic indicators continue to paint a gloomy picture for the UK’s recovery, businesses are reversing their priorities and are putting cashflow before customer relationships to keep afloat and bad debt at bay. Following news this week that SMEs are owed £33.6bn in late payments, the latest figures show that businesses are getting tougher on customers who pay late and were chasing overdue invoices sooner. 2011 figures, compared to the same quarter in 2010 saw average time from invoicing to a Letter Before Action improve from 72 days to 68 days.

This is quite a reversal on 2010 when businesses were giving customers much longer to pay before action was threatened, in a bid to maintain good relationships.

There is still much more room for businesses to sharpen up their debt management strategies and show customers they mean business when it comes to late payment. It’s all well and good threatening legal action but firms need to demonstrate they will pursue a claim through the legal system or they are in danger of crying wolf. Businesses should not let their fear of losing customers or damaging relationships get in the way of taking a hard line on overdue invoices.