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BizReport : Trends & Ideas archives : January 05, 2017

Late invoice settlements cause 60% SMEs cashflow problems, anxiety

In a survey of 500 business owners in the UK, two-thirds of medium enterprise owners revealed they have struggled with cashflow problems over the past two years with invoices unpaid within their debtor period causing a shortage of working capital.

by Helen Leggatt

The survey, commissioned by Amicus Commercial Finance, found that 61% of invoices issued by small- and medium-sized enterprises (SME) in the UK remain unpaid within the debtor day period. Of those firms, 70% say they reply on prompt payments to avoid struggling with a shortage of working capital. Furthermore, 16% of SME invoices remain unpaid after 90 days and 7% unpaid after six months.


The biggest challenge caused by cashflow shortages was paying suppliers, cited by 41% of respondents. Meeting debt repayments (30%), buying inventory (29%) and paying staff (24%) were also affected by non-payment, while 18% said they had lost contracts due to cashflow problems.

However, the struggles are psychological as well as financial. According to the survey, almost a third (28%) said cashflow problems have caused them considerable stress and anxiety and a fifth (19%) reported that their frustration had turned into anger. One-in-ten (10%) admitted they became scared their business would go bust.

"Our research shows that most small firms recognise the damage caused by cashflow problems but that doesn't guarantee their immunity. The worst case scenario is insolvency but in our experience, slow paying invoices are often to blame," said John Wilde, managing director of Amicus Commercial Finance, a firm that provides a revolving working capital facility based on a proprietary invoice discounting platform. "As working capital and cashflow are by their very nature dynamic, most traditional systems have failed to keep pace over the last few years."

Tags: cashflow, financial technology, invoice, SME, survey, UK

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