Some new figures from Creditsafe indicate that a staggering 47% of businesses have lost money in the last year when dealing with another business without a signed contract in place or any due diligence. Other quite amazing, and shocking statistics to come out of the survey are :-
- 7% of UK businesses have sufefred fraud
- 14% have provided goods or services without ensuring a contract
- with new customers, 40% of businesses don’t have adequate procedures to ensure a proper contract is in place
- Only 47% undertake credit checks for new customers,
- 73% don’t check whether the delivery address for goods is the registered address for the business
- 67% of companies don’t check for an online presence for the business they are about to do business with
- 20% did not carry out checks on the basis they were dealing with a big company and that this meant there was no risk
In our view the above figures are shocking. In the current climate, it is hard enough to stay in business due to macro economic conditions. Most businesses should also be aware that when a counterparty defaults, the legal system for recovery is far from quick and far from perfect, and then there’s the risk of a debtor going bust. To succeedi n business it is vital to consider risk, to mitigate that risk in a practical and proportionate way, and there are many tools available to do this, so really there is no excuse.
When firms do lose money after neglecting due diligence or failing to have a contractual agreement in place, there is a reluctance to chase up monies through legal channels. Just a quarter of firms (25%) that lost monies after failing to be paid appropriately after delivering goods or service threatened legal action. The vast majority (40%) accepted losing these monies and the passive action taken was to refuse to offer services to the company in the future.