IOU note

SMEs owed £586bn in outstanding invoices



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UK SMEs are owed £586bn in unpaid invoices, according to new research from Lloyds Bank.

The bank’s latest Business in Britain report revealed that the amount owed to SMEs had grown 8% since January and showed late payments were the biggest cause of cash flow problems.

The average small business is owed more than £108,000 in unpaid invoices, while the report indicates that nearly a third of firms (30%) expect it to get worse.

Businesses are expecting more customers to require deferred payment terms in the next six months. 

However, despite these issues and the recent political shocks, businesses said they were expecting to invest an average of £1.5m into their business over the next six months.

Currently, SMEs own a combined total of £2.6 trillion of assets outright, but these investment plans could be put on hold by a lack of awareness of different forms of financial support with only two in five of the firms surveyed being familiar with invoice finance.

“…If companies are having to wait longer to be paid, and are reporting that they expect to face an even longer wait in the future, this slowing of payments could be holding businesses back from releasing critical cash to drive future growth,” said Adrian Walker, managing director of global transaction banking at Lloyds Bank. 

“The amount of money that firms have tied up in unpaid bills and other assets is significant, and this report suggests that these sums could be unlocked if businesses were more aware of the funding options that are open to them.”

Adrian said that small businesses were the lifeblood of the British economy, but there are too many who are being held back due to a lack of awareness over financial options.

“There is a huge opportunity for them to accelerate their prosperity if they speak to a trusted adviser or bank manager to learn more about how they can unlock cash in their business, which will allow their business to grow and invest in growth for the future.

“At Lloyds, our relationship managers are trained to have working capital conversations with their clients and, with our market-leading digital tools, we can help provide valuable insight to support businesses in their growth aspirations.”

 

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