Blog post -

Late payments have gotten worse for UK’s SMEs

At the beginning of 2021, the UK government noted that firms across Britain were owed £23.4 billion worth of late invoices, and this was affecting their cash flow and chances of surviving.

It turns out that the situation could be even worse than the official figures indicate. A study released in July 2021 by cloud-based credit management platform Knowit finds that about £50 billion worth of invoices were unpaid to SMEs in the UK — a figure that is more than 50% higher than the official numbers.

Knowit’s research further shows that SMEs are unable to pay salaries on time and are relying heavily on invoice financing to infuse money into their businesses, which may hinder their ability to raise capital in the future.

Recent research by Intuit, a global technology platform, also indicates that on average at least £21,356 of invoices was owed to SMEs due to late payments in the month of September 2021 alone.

For many SMEs, long payment terms or late settlement means they need to find other ways to get working capital into their business. Not all of them succeed — about 50,000 SMEs shut every year due to late payments. So putting in processes for effective cash flow management is a matter of prioritising the survival of a business.

How should businesses go about doing this?

At RIABU, we have developed a concept called the Virtuous Revenue Cycle (VRC) which is focused on continuous improvement in service culture, findings ways to delight customers by anticipating and responding to their every need, and ensuring that you get paid on time. The VRC includes understanding mutual expectations through written credit policy, proactive customer service, and engaging the whole team to identify and resolve unmet customer expectations and assure timely payment. We believe that by taking an active and pre-emptive approach towards managing cash flow, SMEs can greatly improve their odds of surviving and thriving.

Get more tips on effective cash flow management from our book, Let the Cash Flow. To find out more about how RIABU helps small businesses get paid on time, visit RIABU.com

Topics

  • Business enterprise, General

Categories

  • cash flow
  • late payments
  • mark laudi
  • cfo
  • sme
  • invoice
  • riabu
  • simon littlewood
  • risk
  • business owners

Contacts

Related content

  • The invisible cost of late payment on small businesses


    Anyone running a small business will understand how late payments from customers can not only be a problem in the short term, but could also lead to closure of your business. That’s because late payments are not just delayed cash flow but involve numerous other visible and hidden costs. As delayed payments affect businesses, it impacts the economy too. For instance, the annual cost of late pay

  • What a cash flow statement can reveal about your business

    If you want your small business to become more profitable without changing your product portfolio, one way is to start paying close attention to its cash flow statement.
    An income statement shows the net profit of a business, while cash flow shows how much cash you have on hand. Net profit is not the same as cash in hand, because the income statement and the balance sheet are based on an accr

  • Risky debt and insolvencies are rising in UK

    The UK government has recently withdrawn support measures that were introduced to help businesses survive during the pandemic, and this has led to rising insolvencies. In September, about 1,446 companies went bankrupt, which is a 7.2% increase from the previous month, and a 56% increase compared to the same month last year.
    Want to know more about this topic? Listen to RIABU's Simon Littlewood

  • SMEs in Eastern Europe concerned by late payments and economic instability

    A survey by trade credit insurer Atradius about payment practices in East European companies highlights a stable business environment and fewer bankruptcies in 2022. But, of course, this was before the Russian invasion of Ukraine. And even then, digging deeper into the report reveals that small businesses are more worried than larger ones, especially those involved in the cross-border trade.
    W

  • The important link between environmental sustainability and cash flow

    The world needs to cut greenhouse gases by half by 2030, and eliminate it completely by 2050 to avoid catastrophic climate change. Large and small companies alike have important roles to play in this fight.

    Want to know more about this topic? Listen to RIABU's Simon Littlewood and Mark Laudi discuss this issue on our podcast, Be First In Line To Get Paid:


    Larger companies with lo

  • World Bank hints of possible delays in loan repayments by SMEs

    In its recently released annual report that focuses on interrelated economic risks worldwide, the World Bank has raised concerns about possible delays in loan repayment by micro, small and medium enterprises (MSMEs).
    According to the report, MSMEs make up over 90% of all firms and employ 60–70% of the working population and contribute 50% of GDP worldwide. Hence, their survival is crucial for p

  • SMEs in UK are having sleepless nights over late payments resulting from cost-of-living crisis

    A recent study by Barclays indicates that 26% of small and medium enterprises (SMEs) in the United Kingdom are facing late payments.
    This is because their customers’ operating margins are getting squeezed due to higher costs. This is in turn caused by the rapidly rising prices of heating, eating, and fuel.
    Want to know more about this topic? Listen to RIABU's Simon Littlewood and Mark Laudi

Enter your email address to follow RIABU

When you choose to create a user account and follow a newsroom your personal data will be used by us and the owner of the newsroom, for you to receive news and updates according to your subscription settings.

To learn more about this, please read our Privacy Policy, which applies to our use of your personal data, and our Privacy Policy for Contacts, which applies to the use of your personal data by the owner of the newsroom you follow.

Please note that our Terms of Use apply to all use of our services.

You can withdraw your consent at any time by unsubscribing or deleting your account.
Check your inbox

Email sent to __email__. Click the link there to follow RIABU.

Okay