NORTH East businesses have been warned they may face a festive hangover in the form of bad debts.

A senior debt recovery expert says December and January represent the worst two months of the year for payment of business debts.

The combination of bad weather, lower productivity and the distraction of parties and holidays mean that businesses find their customers either avoiding them altogether or promising payments before Christmas that do not arrive until mid January.

This all leads to a serious hangover for businesses, in particular SMEs, who find that cash flow has considerably deteriorated by the end of January.

Mark Green, head of debt recovery at Newcastle-based Short Richardson & Forth Solicitors, said: “North East businesses of all kinds suffer at this time of year with the slowdown in payment by customers. Many businesses consider it to be unavoidable but that is not the case.

“Credit controllers should be contacting customers in advance of invoices falling due to remind them of the payment date and that they expect to receive payment on or before that date and not after.

“Businesses should also consider warning commercial customers that a late payment will lead to compensation and interest being added to the debt in accordance with the Late Payment regulations. This is charged per invoice and can be substantial.”