£500bn owed to UK SMEs in outstanding invoices

8 February 2016

Small businesses in the UK are owed more than £500bn in outstanding invoices, an increase of 70% in two years, according to research.

A third of SMEs said they thought the problem of slow or late payments would get worse, according to Lloyds Bank Commercial Banking's Business in Britain research, as SMEs expect customers to demand deferred payments terms in the next six months.

According to the research, which gathered the the views of 1,500 UK companies, 17% of SMEs admitted to having cashflow problems, with almost of third blaming this on late payments.

The average SME is owed £100,000 in outstanding invoices, up from £60,000 in 2014, with one in four businesses owed £200,000, more than double the number owed this amount in 2014.

Businesses in Sussex, Surrey, Hampshire and Dorset were owed the most in outstanding invoices, an average of £109,000, while those in Scotland were owed the least, £79,000.

Lloyds bank said the figures showed that a lack of understanding of alternative funding options was holding British businesses back from developing their supply chain.

“Different types of funding such as invoice finance or asset-based lending can help unlock the working capital that they need, allowing businesses to grasp more of the opportunities that exist at the moment,” said Stephen Everett, head of product and propositions for Lloyds Bank, Global Transaction Banking.

Meanwhile, MarketInvoice said according to data it had taken from 1,000 invoices sent to nine of the top 10 largest UK supermarkets, 69% of payments last year were late.

In a preview of fuller research due to be published this month, it said on average UK supermarkets paid invoices just over a week late last year. Just over 10% of invoices were paid on time and 7% were paid more than a month late.

The supermarket sector paid a greater proportion of invoices late when compared with FTSE 350 companies, blue chip firms and banks, according to MarketInvoice.

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