Unpaid invoices increase by 70 per cent for SMEs

posted by 5 years ago in News

A flood of bad debts and postponed investments are causing a delay in UK small to medium-sized businesses over the months approaching.

Alerts that the economy is falling down a tornado are clear amongst UK SMEs according to the most recent SME Confidence Tracker report conducted by Bibby Financial Services. Figures for Q2 have highlighted that the amount of unpaid invoices left unsettled has lifted to £20,403 – a 70% increase compared to last year. Research also revealed a pattern of a decrease in investment dropping it from £101,920 during Q2 last year to £65,782 the previous month.

Global CEO at Bibby Financial Services, David Postings comments;

“SME activity is often a barometer of wider economic performance. When SMEs are taking on more work, hiring staff and investing in equipment and machinery, it is reflected in the performance of the wider UK economy.

“However, right now we are now seeing signs that businesses are delaying investment decisions. Furthermore, data showing rising bad debts amongst SMEs could indicate a build-up of pressure in supply chains throughout the country.

“It is possible that this is a sign that the UK is heading for a recession, but it’s still too early to call. We will know for sure over the coming months.”

Just over a quarter (28%) of SMEs expressed that a feeling of uncertainty regarding the economic position has put them off investing, 26% say it is the rising costs while 25% say it’s because they are aiming to build their company’s cashflow.

Postings continues;

“In the wake of two general elections and a referendum in little over two years, not only is there voter fatigue, but there is a real sense of nervousness and trepidation amongst SMEs.

“Businesses don’t know what’s round the corner and this is having a negative multiplier effect on supply chains around the country.

“What we need now is clear direction from the government on our negotiations with the EU and clarity over its commitment to regional growth strategies such as the Northern Powerhouse and Midlands Engine, which are vital to help create a balance economy.

“The period when parliament returns following the Summer recess could be key as it will determine whether the government has the ability to survive and provide direction. If not another election may be required.”

Of those who responded, they were asked what they believe their biggest challenge was to this, research found that the biggest encounters are gaining new business, maintaining and growing their skilled employees and controlling their cashflow.

Head of Business Finance at Businesscomparison.com Laura Thomas expresses;

“The cocktail of elections and referendums has caused unsettlement felt by UK SMEs, which doesn’t make for a healthy business environment. We are still very unclear on the outcome of the Brexit negotiations and until we receive some clarity businesses may well delay investment decisions. Priority should be given to negotiating the right trade agreement which would help get the wheels moving again.”

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