New data from the Asset Based Finance Association (ABFA) show that SMEs remain hamstrung by late payment and that it is the smaller firms that are suffering the most. The need to raise awareness of alternative finance has never been greater.

According to the ABFA, small businesses with a turnover of less than £1 million face an average wait of 72 days to get paid, which is 11 days more than at the peak of the recession. Tellingly, larger SMEs have seen their wait shorten. This delay in payment is strangling the growth of a key group of small businesses and, by affecting cashflow and limiting the capacity for investment, it is posing a threat to wider economic recovery.

The Small Business Conciliation Service is the latest government initiative to target late payment, but with previous schemes failing to meaningfully address the issue, SMEs remain wary about its ability to have a serious impact on this long-standing problem. This is why alternative finance, in particular invoice finance, needs to take centre stage.

Invoice finance is a flexible, cost-effective and easy-to-access way for SMEs to combat late payment without risking business relationships. To make it easier for firms to take this step, there needs to be a greater awareness of services such as invoice finance and what they have to offer.

Recent ABFA figures show that the use of asset-based finance is growing sharply, while new data from the P2PFA indicate that peer-to-peer lending is growing faster than ever, with sector lending now standing at £3.15 billion. The growth in lending through crowdfunding platforms has also been spectacular. This is all good news but as the latest data on late payment suggest, there needs to be more impetus and more energy behind educating small business owners.

However, with invoice finance and other alternative finance services taking on a more prominent role, SMEs may increasingly be able to put late payment problems behind them.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.