UK SMEs are writing off billions in debt
12 December 2016
The findings show that 76% of SMEs wrote off debt during 2015, totaling just under £50bn collectively, or £134m every day. In addition, one-in-five SMEs are experiencing cash-flow problems according to the research, with 8% currently using invoice finance, and 19% planning to do so in the future, including 11% in the next 12 months.
It seems that non-payment of debt is a significant problem for SMEs. Amicus Commercial Finance, the organisation which undertook the research, studied 500 businesses and found that medium-sized firms employing between 50 and 249 people were the worst hit by delayed invoice payments, resulting in an average loss of £33,750 a year through unpaid debts.
So what are the reasons behind non-payment of debt? The study found that the biggest challenges including paying suppliers (according to 41% of business owners), meeting debt repayments (30%), buying inventory (29%) and paying staff (24%).
One of the problems SMEs face in this context is that of underinsurance. Research by insurance group, RSA, shows that 88% of insurance brokers see underinsurance as a problem for SME clients, which suggests that many do not have sufficient coverage in the event of experiencing unexpected issues.
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