Each year studies show the growing changes in UK business, especially the changes that SMEs are seeing with regard to invoice financing. The current numbers may come as quite a shock to small business owners, as a study by Tide, the alternative business bank, found that the average UK business are currently chasing down five outstanding invoices simultaneously with a combined average of £8,500 being owed.
It isn’t just the outstanding capital that is hurting small businesses. Self-employed individuals have stated that they are currently spending up to one hour each day chasing these outstanding balances, which are reaching up to £1000 – an amount that can mean the success or failure of a small one-person operation.
The collective balance
£8,500 is a lot to an SME but may not seem much to the UK as a whole. But when we take a look at the findings across Britain, we see that the collective outstanding payments that UK business are trying to track down in 2020 is close to £50bn.
With more and more small businesses beginning to operate in the UK each year, and with economy growing, we are expecting these outstanding invoice costs to also rise. In fact, if we look over the outstanding invoice amounts over the course of three years, between 2014-2016, we can see exactly how much the problem is spiralling out of control.
Between 2014 and 2015 outstanding invoices across the UK grew from £55bn to £67bn – a jump of 8% and a staggering 36% from 2011 where outstanding invoices totalled in at £49.5bn.
It isn’t just the outstanding balances that are the biggest worry, research suggests that the average SME is waiting an average 72 days for each payment. London based businesses are being hit the worst. They are recording at least seven invoices outstanding at any one time and some businesses are having to dedicate more than two hours a day to chase them up.
This is where invoice finance comes in to play. Being able to free up this capital, which is otherwise tied up, an SME can quickly make use of the funds in more important areas, as well as eliminate the time spent tracking down late payments.
How Quote Goat Helps Businesses Find The Right Finance
Quote Goat has partnered with a leading business finance provider to give you access to expert advice along with a range of business finance products from merchant cash advances to lending from high street banks. Get in touch using the button below for free impartial advice.