UK SMEs missing out on over £250bn due to late payments

UK SMEs missing out on over £250bn due to late payments
According to a recent study by Siemens Financial Services, SMEs are an integral part of the UK economy, accounting for 47 percent of all private sector turnover.
They bear the brunt of late payments and long payment terms. Businesses (with turnover of under £1m) wait for 72 days for payment. Businesses with an annual turnover of £1m-£10m wait on average 53-54 days, and the largest businesses wait on average 48 days. A typical SME spends 130 hours a year chasing outstanding invoices. The cost associated with this time taken is £10.8 billion per year. Unpaid invoices account for 14 percent of SMEs’ annual turnover.
These costs combined mean that SMEs are missing out on over £250bn of cash flow. Outstanding bills are viewed as a drain on cash flow, yet finance products such as invoice finance can be used to unlock funding. Invoice finance is increasingly being seen by SMEs as a flexible and reliable tool to unlock working capital and now provides more funding than ever before to SMEs with funds used across the UK recently exceeding £20bn for the first time.
This further emphasizes the increasing need to protect SMEs’ receivables against non-payments by clients by using either credit insurance or non-recourse invoice funding solutions.