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Credit Management

A third of small businesses ‘in the dark’ over money owed

By CreditMan Friday, October 31, 2014

More than a third of small and medium-sized businesses are in the dark about how much money they are owed in unpaid invoices, research by funder Bibby Financial Services (http://www.bibbyfinancialservices.com/) has revealed.

In total, 36 per cent of SMEs were unable to say how much they have outstanding. Of the businesses that did know, almost a third (31 per cent), said they were owed more than £20,000 and more than one in 10 (14 per cent) were owed more than £50,000. Six per cent were owed in excess of £100,000.

David Postings (http://www.davidpostings.co.uk/), CEO of Bibby Financial Services believes the findings highlight ongoing difficulties small businesses face in managing credit control. He said: “Having a robust credit control process in place, and being able to chase invoice payment is the key to effective cashflow management which is critical for any business.

“But many small businesses – particularly those with few or no employees – cannot effectively manage outstanding payments because they are focused on developing new business and fulfilling existing orders”, he added.

Findings of the study - conducted among 1,000 small and medium-sized enterprises in Q3 – represent a barrier to growth for thousands of small businesses throughout the country. The issue is particularly acute in the hospitality sector, with two thirds (67 per cent) unsure of the amounts owed to them. Meanwhile, almost four in ten (39 per cent) transport and distribution firms admit to being unclear about what was in their payment pipeline.

Mr Postings continued: “This represents a significant amount of money owed to UK SMEs and the value of these outstanding invoices could be reinvested into businesses in the form of recruitment or technology.

“Small and medium sized businesses are the backbone of the UK economy so this represents a significant threat to long-term economic growth.”

The specialist funder is calling for more businesses to consider forms of finance to bridge the payment gap or to outsource the collection of payments to specialist providers.

Mr Postings added: “Invoice finance not only provides working capital to allow businesses to operate more effectively, but funders can help SMEs to take control of invoice payment, credit control and sales ledger management.”

About Bibby Financial Services

Bibby Financial Services is the UK’s leading independent invoice finance specialist and a trusted provider of cashflow funding solutions to 7,000 businesses, handling annual client turnover of £4.9 billion and advancing in the region of £388 million.

With a network of 17 local offices throughout the UK, Bibby Financial Services has the agility to make informed funding decisions quickly and efficiently.

Bibby Financial Services is a member of the Asset Based Finance Association and supports businesses in both the UK and overseas, utilising expert knowledge from more than 28 years’ experience, helping companies regardless of size across a broad range of industry sectors.

In 2011, 2012 and 2014 the company was awarded a place in The Sunday Times 100 Best Companies to Work For and in 2013 it was awarded the NACFB Best Factor and Invoice Discounter award for the sixth consecutive year and ninth in total.