Insolvency Research ‘Further Proof SMEs Need Quality Legal Advice’

Legal Experts Describe Study As ‘Prime Evidence’ Of Necessity Of Quality Support

27.09.2013

By Rob Dixon

New research highlighting that 76 per cent of small and medium-sized enterprises (SMEs) have lost money due to customers becoming insolvent is further proof of the importance of  having access to high-quality advice, legal specialists have warned.
 
The study by Experian was compiled from a poll of 600 small firms and also revealed that 35 per cent of SMEs lost more than £10,000 over the past five years.
 
On the issue of credit checks, 68 per cent of SME owners stated they checked both customer and supplier credit ratings annually, while a quarter stated they only checked the ratings of new customers and no ongoing assessments.
 
Business lawyers in Irwin Mitchell's specialist SME group, which has vast expertise in relation to helping growing firms get advice on all legal issues, said the study showed the vital importance of proper support.
 
Steve Beahan, a partner in Irwin Mitchell’s SME group who specialises in commercial litigation and dispute resolution, said: “Growing businesses are in a strong position at present to take advantage of many of the opportunities which are now beginning to emerge as the economy recovers.
 
“However, they will only be able to thrive and develop such opportunities by ensuring they are fully compliant with regulations and have access to key advice on financial issues and the changes they need to make to expand.
 
“This kind of survey is prime evidence of the need to have quality legal advice on hand, as potential ways to tackle this issue could be to ensure the right contractual agreements are in place from the outset to avoid being negatively impacted when other companies fall into hardship.
 
“Cashflow is fundamental for SMEs looking to take the next step forward in their development, so ensuring robust systems are in place to deal with issues such as a client’s insolvency is imperative.”

Read more about Irwin Mitchell's expertise in relation to SMEs