Value of debt sees 123% Increase
Value of debt chased by Recruitment Consultancies sees 123% Increase
Figures from Lovetts reveal industry is cracking down on debt
Lovetts, one of the UKs leading debt recovery law firms has revealed a huge increase in the volume of bad debt being pursued for payment by recruitment agencies. The value of debt being chased through court claims has increased by a staggering 123% Q1 2009 vs Q1 2008.
The figures suggest that recruitment consultancies are acting quickly and decisively in recovering debt during the tough economic conditions the industry is currently facing with cuts in headcount across many industry sectors. This is evidenced in the fact that the amount of time recruitment consultants are allowing between a Letter Before Action being issued to a claim being made through the courts has reduced significantly.
LBAs are used to secure payment, or to obtain a response from a customer before the commencement of a legal claim. In Q1 2009 the time between LBA and claim reduced by over 5 days on Q1 2008. The figures from Lovetts also reveal a 66% increase in the value of debt being chased through Letters Before Action.
Charles Wilson, Chairman and Managing Director of Lovetts says: Our findings demonstrate just how active recruitment agencies have become in tackling bad debt. These businesses appreciate the risks of allowing late payments to become major debt issues. As such, they are acting on both longer term arrears, and current outstanding payments which is dramatically increasing the level of debt chased. This proactive approach to credit management is essential for businesses to survive during these tough economic times.