Drop in County Court Judgements but what does this mean for SMEs?

There has been encouraging statistics to show that the number and total value of County Court Judgements (CCJs) issued against businesses in England and Wales fell sharply during the first quarter of 2016. However the specific figures for SMEs within these statistics are still a cause for worry.

Not quite good news for SMEs

CCJs are now at the lowest level they have been since before the financial crises, but SMEs are bucking this trend by recording more CCJs than larger businesses over the last year, according to figures released by the Registry Trust. The research shows that although the volume of CCJs against businesses has dropped by 17 per cent, the trend for SMEs went in the opposite direction(1). The report said that generally smaller businesses which were not incorporated fared much worse with numbers rising rather than falling.

In fact, research from earlier in the year show small businesses increasingly pursuing CCJs to chase bad debt, with 23 per cent more businesses filing CCJs in the second half of 2015 compared to the first half; £4,619 was the average amount pursued(2). This could be due to the UK making it easier to issue a CCJ by making the whole system now readily accessible online. More likely than not, SMEs won’t be able to take into account the full costs incurred with that particular debt or CCJ. Time spent chasing the money, postage and telephone calls or short term bank loans to cover the late payment and keep cash flowing.

CCJ drop

Overall decline of CCJs

Generally, there were 21,860 CCJs recorded against businesses in England and Wales during the first three months of 2016, a 17 per cent fall on the same period in the previous year. To put this into perspective, the highest number of CCJs recorded was during the financial crisis where 71,867 judgements were raised in Q1 of 2009.

Likewise, the total value of CCJs against businesses in England and Wales fell 11 per cent from £87 million to £78 million in Q1 2016. The average value of a business CCJ in the first quarter of 2016 increased by six per cent to £3,554.

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1 smeinsider; 2 enterprisetimes