Late payments are forcing business owners to make tough decisions. Tackling the issue of unpaid invoices will be vital to allow small businesses to continue trading and grow their enterprises, ultimately leading to the growth of the UK economy.

The Small Business Commissioner Liz Barclay has revealed that SMEs are under threat due to outstanding invoices in excess of £23.4billion unpaid since January. Late payments cause SMEs to drain vital cash flow and threaten their financial stability.

Business owners are considering extreme measures to stabilise, financial loans and redundancies, to name a few.  Based on an average salary in the UK, of £29,600, unpaid invoices could see two million people back to work. With lots of cash flowing out, and not much coming in, an SME may be unable to demonstrate to lenders a clear and consistent cash flow, leaving the options to access affordable finance limited.

Among business-to-business SMEs across the UK, YouGov surveyed a sample of 500 businesses to better understand the unpaid invoice situation.

// 68% confirmed they regularly experience late payments

// 62% spent time each week chasing overdue invoices.

This would equate to four million businesses (and 1.7 million VAT registered businesses) struggling to be paid for products and services they have delivered.

The time, energy and resources drained on chasing unpaid invoices that could be redirected to growth and sales, leaves SMEs unable to focus on the important revenue driving activities. Let us add the Pandemic impact, and we are looking at a dire situation for many SMEs. Increased levels of debt, reduced cash flow and with some major corporates looking to retain cash themselves –payments freezes for an entire supplier network.

Despite the government outlining a route post lockdown, many organisations on the receiving end of late payments will struggle to survive after the crisis.

As many as 15 per cent of the UK’s SMEs are rated ‘fragile’ and risk insolvency during the next four years, according to research by Euler Hermes.


Trust in invoice finance

With 2022 a key year to recover and build back stronger, tackling the endemic issue of late payments should be a business priority. Businesses should consider invoice finance with a trusted and stable financial partner.

Gain back crucial cash flow and create a more robust and sustainable accounting process.  Invoice finance allows you to sell your invoices and receive immediate cash flow (hence, a cash flow solution).

With GRENKE, you can access up to 90% of the invoice value in a matter of 24 hours.

Next, our receivables management team seeks payment on the unpaid invoices. The team works professionally and personally with your debtors and aims to secure payment within the set payment terms. Our team make it easy to pay, and offer a reminder process to debtors that require a little nudge.

Once the invoice is paid, you receive the rest of your invoice amount, minus a Fixed Fee agreed and any Variable Fees agreed.

REMINDER: Fixed Fee - % of the invoice, Variable Fee - % per day the money we finance is outstanding.

Before taking the extreme measures, companies must look to all the financial options that tackle the issue of late payment. Plan effectively for the turbulent times ahead with invoice finance with GRENKE.

Speak to a member of our team today, for a full review of the cash flow potential within your business.