Neither the government nor the private sector can or will fix it, so it’s a good thing that invoice finance offers a solution to a problem that continues to undermine SME sector development: late payment.

According to latest Business in Britain report from Lloyds Bank Commercial Banking, SMEs are owed an eye-watering £586 billion in outstanding invoices. The document states that the average small business is owed over £108,000 in unpaid invoices, an increase of 8% compared to the figure in January, and that almost a third of SMEs cite late payment as the main reason for cashflow problems.

The report features some incredible figures but the extent of late payment-related problems is hardly surprising. But perhaps it should be. Yes, late payment stories regularly make the news and the issue is a long-standing one, but at the same time, there has been a constant stream of promises from politicians and private sector figureheads and bodies to take the matter in hand. Yet, for all the rhetoric, the problem is getting worse: according to the 2016 Working Capital Outlook Survey from C2FO, SMEs in the UK reported that 20% of their customers paid late, compared to 11% in 2015.

But what about the Small Business Commissioner, for whom tackling late payment is priority? What is this government office doing? The answer is shockingly simple: nothing. The post that was created last summer has yet to be filled. According to the Asset Based Finance Association, small firms are waiting six weeks longer than large firms to be paid. But the SME sector will not get a Small Business Commissioner before 2017.

It goes without saying that urgent action is required but there seems little appetite for meaningful activity, immediate or otherwise. This is why asset-based finance and invoice finance in particular is so important – it gives small businesses a means of protecting themselves against the damage late payment can cause. These companies face significant demands on cashflow, including costs relating to auto enrolment and cybersecurity, and late payment issues mean that they have to take on this financial fight with one hand tied behind their backs.

SMEs own assets worth trillions of pounds and it is this capital that offers these companies a lifeline in terms of combating late payment. More and more small businesses are accessing money and maintaining cashflow through invoice finance but awareness of the alternative finance service still needs to grow.

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