The average business in the south east is owed more than £100,000 in outstanding invoices, according to new research by a national commercial bank.
The research by Lloyds Bank found the average small- or medium-sized enterprise (SME) in the south east is owed £109,940 by customers – a rise of more than 139 per cent since 2014.
The bank say they expect the problem to get worse during 2016, with 36 per cent of small businesses expecting more of their customers to demand deferred payment terms in the next six months,
Andy Styles, south east area director for Lloyds Bank said, “A third (32 per cent) of businesses in the South East told us that late payments were affecting their cashflow, and with the amount of money owed them in unpaid invoices, it’s not surprising.
“Yet having this volume of unpaid invoices – just like having thousands tied up in physical assets – needn’t prevent firms from having working capital to invest in growth.
“Different types of funding such as invoice finance or asset-based lending can help unlock the working capital that they need, allowing businesses to grasp more of the opportunities that exist at the moment.
“Failing to take advantage of these types of funding, on the other hand, could be seriously holding them back, affecting not only their growth, but for many firms, potentially stunting the the growth of the entire supply chain beneath them.”
The research also found south east SMEs own an average of £474,104 in assets that could be used to fund further growth – three times more than the amount owned in 2014 when Lloyds Bank found that small and medium-sized businesses in the region owned an average of £147,382 in assets.
The bank claims, the figures suggest that a lack of understanding of alternative funding options is holding the South East’s SMEs back.
Alternative funding options can use these unpaid bills and assets to help provide firms with cashflow difficulties with access to working capital, ensuring they don’t miss out on opportunities to grow.
Such options include invoice finance, for example, which can allow companies to access up to 90 per cent of an invoice’s value within 24 hours of it being issued.
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