UK SMEs are writing off an average of almost £12k every year, a new report has found. Most of that is accounted for by bad debts, and the growing pressure on firms to manage their cashflow effectively is growing, according to Amicus Commercial Finance, whose latest research shows that a total of £134m is being written off by UK buisness every day.
The issue of late payments is nothing new – a recent report found that thousands of SMEs have gone out of business thanks to cashflow problems caused by late payment.
SMEs relying heavily on prompt payment
John Wilde, Managing Director of Amicus Commercial Finance, commented: “Our research shows that not only is there a reliance by many UK SMEs on clients’ invoices being paid within the debtor day period, but that despite this, significant amounts of debt are being written off due to non-payment. Given this, it’s understandable that business owners are increasingly turning to invoice finance as a way of converting unpaid debts into instant working capital.
In terms of remedies, there are signs that more firms are beginning to use invoice finance. According to Amicus, 8 per cent of firms said they currently use invoice finance, while an additional 19 per cent of business owners plan to use it in future including 11 per cent in the next 12 months.