The survey of 27,000 SMEs, conducted by SME credit rating company Ormsby Street, found that the number of county court judgements (brought by small firms increased by almost a quarter (23 per cent) between the first and second halves of 2015, with the average value of each claim totalling £4,619.
Jonathan Russell, Partner at UK200Group member firm ReesRussell:
The increase of the small claims route for small businesses to chase debts highlights that more small firms are taking advice and firming up on their credit control procedures.
It also indicates that small businesses are now feeling less threatened by big businesses, who believe they are too big for small businesses to do anything.
However, small claims court may not be the best option, as since April 2015 the court fees have been significantly higher and even if judgement is achieved, collection can be difficult.
Many businesses should instead look at using the Statutory Demand, which is not only a cheaper alternative, but has larger consequences for the person who owes the money if it is ignored.
The other increase that I am seeing is the use of mediation, not necessarily as part of a legal process, but as a direct course as this can be a much better way of settling a business dispute; especially if parties want to maintain a working relationship.
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