Lovetts, one of the UK’s leading debt recovery law firms has revealed a huge increase in the volume of bad debt being pursued for payment by car and commercial motor retailers. The value of debt being chased through court claims has increased by a staggering 537% Q1 2009 vs Q1 2008.
The figures suggest that motor retailers are acting quickly and decisively in recovering debt during the tough economic conditions the motor industry is currently facing. This is evidenced in the fact that the amount of time motor retailers are allowing between a Letter Before Action being issued to a claim being made through the courts has almost halved. 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 has reduced over Q1 2008 by a massive 23.5 days.
The figures from Lovetts also reveal a 298% increase in the value of debt being chased through Letters Before Action. In fact the number of LBA requests Lovetts has made on behalf of its motor retailer customers has increased by 68% Q1 2008 vs Q1 2009.
Charles Wilson, Chairman and Managing Director of Lovetts says: “Our findings demonstrate just how active motor retailers have become in tackling bad debt. These businesses appreciate perhaps more than most, 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.”