The global economic downturn has made small businesses even more aware of managing potential issues in payments from their key customers, including the risk of providing trade credit. We have responded by offering services to help small businesses in the UK - whether they are Barclays customers or not - to manage this credit risk more effectively. This includes CreditFocus, a web-based credit management service which helps companies assess the creditworthiness of the businesses they trade with, and can also provide support in the event that any action may be needed to follow up on payments.

Bad debts and late invoice payment are two of the most common causes of business failure among SMEs. CreditFocus, launched in early 2008, is a web-based offering that helps small businesses manage and reduce these risks. Developed in partnership with the credit reference agency Experian, CreditFocus won two awards at the 2008 UK Institute of Financial Services (IFS) Awards for Innovation Excellence.

The CreditFocus Classic version was offered free to our small business customers in September 2008. In December 2008 we went a step further, offering this service for free to all UK small businesses – those with turnover under £1 million – whether they are Barclays customers or not, until 31 December 2009.

Two levels of service

CreditFocus has two offerings: CreditFocus Classic and CreditFocus Pro.

CreditFocus Classic allows small businesses who offer trade credit to check the credit status of five of their customers, and to monitor these customers’ credit over time. Barclays business customers can also send one free solicitor’s letter to help chase a late payment. CreditFocus Classic is available to all UK small business - at no extra cost, until 31 December 2009.

CreditFocus Pro offers unlimited credit checking, monitoring and debt recovery solicitors’ letters. This is available to non-Barclays customers for £15 plus VAT per month on a 12-month contract. The price for Barclays business customers is £10 plus VAT per month.

Responding to customers’ issues

The launch of CreditFocus was in response to our research data indicating that small businesses are typically paid 23 days late, costing them tens of millions of pounds in interest each year. In addition, we found our average local business client spends two working weeks a year invoicing and chasing payments, and that poor cash flow and bad debt are the reasons for approximately a third of small business failures.

CreditFocus has had a very positive reception from small businesses. At a time when they are becoming more anxious about their cash flow, liquidity and whether their customers will pay invoices on time, it enables them to assess quickly and easily whether they are offering appropriate amounts of credit, and highlights the potential risks. Since its launch in the first quarter of 2008, users have credit checked over 168,000 businesses using the service. CreditFocus has helped Local Business customers recover millions of pounds in unpaid debts - 70% of the customers who send solicitor’s letters recover some or all of their debt.