There is currently approximately £23.4 billion owed to small and medium sized businesses (SMEs) in the UK under existing invoices which are overdue for payment, based on statistics from the Department of Business, Energy & Industrial Strategy.
Whilst the Government’s voluntary ‘Prompt Payment Code’ requires invoices to be paid within 30 days, average debtor days are nearly double this level. This has led to the average amount owing to SMEs reaching a 5-year high, of £147,000, according to data from the accountancy firm Begbies Traynor.
This is simply unsustainable for many business owners, with a recent surveys from YouGov and Barclays suggesting nearly 50% of SMEs are concerned about cash flow and nearly 60% have experienced late or non-payment if an invoice.
These dire circumstances direct impact the economy, as they curtail the ability of SMEs to invest in product and service expansion or initiate new research & development. This means less growth and fewer opportunities to employ new staff. Importantly, these concerns also drive stress and anxiety among SME business owners, according to research from the Federation of Small Businesses.
