SMEs are gearing up for a big year according to the British Chambers of Commerce (BCC), but as the National Audit Office (NAO) has shown, urgent action is needed to tackle late payment.

According to the Q4 Economic Survey from the BCC, employment and investment intentions are at historically high levels. Tellingly, the organisation underlined the need to convert this potential into reality, and for the business finance system to be strengthened. Comments from the NAO illustrate the central role that alternative finance has to play.

The independent parliamentary body has said in a new report that there is no evidence that the government’s prompt payment policy for SMEs is working. Furthermore, it has been claimed that a third of SMEs do not get paid within 30 days of invoicing public sector clients. Late payment has long been a major bugbear for small businesses and tackling the problem has drawn more attention in recent years. However, the new comments suggest that successful action has been limited.

This lack of progress is why alternative finance is playing such a major role in driving SME sector growth and wider economic recovery. In the most recent chapter of the Mirror’s guide for budding entrepreneurs, the importance of alternative finance in terms of generating start-up funding and maintaining cashflow is highlighted. It is also a means of protection against late payment. Invoice finance is a flexible, transparent and affordable SME finance service that helps to reduce late payment without affecting business relationships.

Alternative finance is playing a larger and larger role in SME finance and, given the failure of public sector initiatives to tackle key problems such as late payment, its status looks set to grow even further.

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