Around three quarters of small to medium sized businesses are worried about cashflow as a direct result of overdue invoices from customers, a study has found.
All the SMEs who took part in a survey for Bath-based alternative finance specialist Time Finance, claimed more of their customers had been late with payments, due to increased overheads across the board.
Around a fifth of respondents said relationships with customers had been damaged by chasing up of money owed, while 8% said the lack of essential working capital meant they were unable to afford key investments.
Read more: Inflation pressures easing on South West firms, NatWest study suggests
Time Finance said its research found that on average smaller companies were owed £250,000 in outstanding invoices. The AIM-listed firm’s managing director of invoice finance Phil Chesham, said it was “no surprise” this was causing “repercussions”.
Mr Chesham said: “Last year, business insolvency reached a 13-year-high with 22,000 business forces to fold. We need to understand the challenges that caused so many businesses to go under so that we can provide better support and avoid preventable insolvency for viable businesses. Rising costs are definitely a factor here, but businesses’ challenges do not begin and end with high overheads.”
Last year Time Finance said the company’s lending book was at an “all-time high”, with bosses last month raising profit expectations for a second time in the firm’s current financial year. In a set of results for the nine months to the end of February the company said gross lending stood at £157.2m - up from £124.6m for the same period a year earlier.
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