How SMEs could do with a £250-billion shot in the arm to combat some serious market headwinds. Solve the problem of late payment and its done. What’s the solution? Step forward invoice finance.

According to a new study by Siemens Financial Services, small and medium-sized businesses are missing out on liquid cashflow every year worth £250 billion as a result of late payment. For a sector being hammered by high business rates, pension auto-enrolment costs and bills relating to cybersecurity enhancement, as well as Brexit-borne market uncertainty, such an injection of cash would facilitate much needed investment and growth.

However, the solution to late payment remains elusive. The Siemens report follows hot on the heels of a similar study from Bacs Payment Schemes whose findings reveal that SMEs are left with an annual bill of £2 billion thanks to late payers.

The consequences of late payment are serious and range from an over-reliance on debt to maintain cashflow to insolvency. According to the Bacs study, 20% of the companies questioned said they faced being driven into bankruptcy if they are owed between £20,000 and £50,000.

So, how can the problem of late payment be solved? New regulation aimed at making large companies make details of their payment practices publicly available could have a significant impact, but it’s early days and the performance of previous initiatives, such as the Prompt Payment Scheme, is hardly inspiring.

This is why invoice finance has such an important role to play. This alternative finance service is a solution that offers small business owners some protection against late payment and the destruction it can wreak. Invoice finance can guarantee SMEs payment without endangering key business relationships.

Alternative finance has become an increasingly important means of accessing funding for SMEs in recent years, and the ongoing failure to combat late payment is certainly part of the reason behind this upturn. With late payment still costing firms billions a year, it is clear that alternative finance and invoice finance in particular is vital to maintaining forward momentum.

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