One of the hidden effects of the Covid-19 pandemic is the level of debt owed to businesses across the UK.

The UK government estimates an eye-watering £23.4 billion worth of late invoices are currently owed to firms across Britain, impacting on businesses’ cash flow and ultimate survival.

Small businesses (those which employ fewer than 50 people) suffer the most from unpaid debt – and that has been exacerbated by the Covid crisis.

Cash is king for businesses, particularly smaller ones, and January is the month in which many businesses fail. This is not entirely down to unpaid invoices, but it is often a significant contributory factor.

According to the Federation of Small Businesses (FSB), around 50,000 businesses close every year due to late payments. The FSB says there was a late payments crisis in the UK pre-Covid and the pandemic has deepened it.

Already in 2021, we have succeeded in recovering payments in full for our clients and securing opponents’ assets by freezing injunctions and charging orders.

Companies which rely on us to recover debts on their behalf range from one-person operations to firms turning over more than £1 billion a year.

We welcome this week’s announcement by the UK government that it is strengthening the Prompt Payment Code to crack down on delayed invoices owed to small businesses.

Under new reforms, big firms that have signed up to the PPC will have to pay small businesses within 30 days – half the time demanded by the current code.

Even though almost 3,000 companies have signed the code, poor payment practices are still rife, with many payments delayed well beyond the current 60-day target required for 95 per cent of invoices.

The amended PPC means businesses owners, finance directors or CEOs will be required to take personal responsibility by signing the code, acknowledging that suppliers can charge interest on late invoices under the code and that breaches will be investigated.

It is a welcome step forward, but what happens when businesses simply cannot get what is owed to them? In some cases, debt is written off because firms attempt debt recovery themselves, or use the wrong legal firm, or believe that using a lawyer is too expensive.

In reality, it is bad debt that is expensive for a business, not using the right debt recovery process. Using lawyers who know all there is to know about recovering cash can sometimes cost nothing.

They can often recover over and above the original debt, meaning fees are covered without further expense to the client.

Chasing debt should not be seen as somehow unethical in a time of national crisis. If you have provided services but not been paid for them, debt recovery could be the difference between survival or otherwise for your business.