New research from NatWest and RBS reveals that 71% of SMEs in the UK have suffered from delayed payments during the last 365 days, with the collective worth of debts paid back beyond the stipulated conditions and terms estimated at £62.87bn. Because of that, 235,000 SMEs maintain time lost chasing after debts has negatively disturbed their own organization.

While much bigger organizations possess a increased value of bills paid past due, as a per cent of earnings it’s smaller sized businesses which can be worst impacted. For instance, 1 in five (20%) companies with the annual turnover which is between £250,000 and £500,000 has suffered. This measures up with only one in 15 (7%) of medium and large organizations. For organizations having a turnover between below £1m, roughly the same as 12% of their gross annual revenues is settled past due.

In spite of these problems, the investigation discloses that less than half (45%) of SMEs took measures to boost their cash flow. Of these businesses, about 1 in 10 (11%) have engaged an in-house credit controller. Only 9% have made use of invoice discounting and 8% have utilised invoice factoring, both of which are impressive methods of plugging a cashflow gap and are currently largely recognised as applicable solutions to core financing techniques.

Peter Ibbetson, chairman small business, NatWest along with RBS said: “Bad debts and late payment of invoices are endemic problems for UK businesses. In excess of one in ten (12%) companies, above 60% of most their invoices tend to be paid late, resulting in big cashflow troubles for many. What is concerning is that so few happen to be making use of the expert services from their lender to help reduce the challenge.

“For companies buying and selling on short-term credit there are monetary remedies accessible which often make it possible for them to change unsettled invoices into working cash. For example, Enable Invoice Finance is ideally suited for companies aiming to seize control of cash flow along with finance growth. It can supply businesses an instantaneous capital shot of up to 85% of the worth of unpaid invoices.

“The inescapable fact for most small companies is that they can be way too busy to take time going after payment as well as coping with debtors. Nevertheless, our invoice finance company can easily pick-up this load associated with chasing after payments in addition to shield businesses by simply protecting their fiscal supply chains.”

Stephen Alambritis, head of public affairs, Federation of Small Businesses, said: “Weak payment practices can significantly have an impact on cashflow for small firms during a period when business people are doing their best to retain critical resources. In actual fact, statistics by BIS indicate that late payments have been responsible for some 4,000 company failures in 2008 alone. Since the economic downturn we now have been urging companies and agencies in both the public and private sector to sign up to the Prompt Payment Code to spotlight best practice and aid increase the cash flow of small companies throughout these challenging times.”


Related Blogs