More than a quarter of UK SMEs are suffering from bad debt of more than £10,000 when customers fail to pay, according to a study by business funder Bibby Financial Services (BFS).
As customers fail to pay invoices, the average amount scrapped by each business in the past 12 months was £11,829, with construction businesses writing off almost £15,000 on average. The study, which took place before the EU referendum, shows that 27% of SMEs have written off money in the past year.
While the average invoice payment times of SME customers have fallen from 40 days to 38 days from Q2 to Q1, it remains a week longer than the lowest waiting time of 31 days in Q1 2014.
BFS global chief executive David Postings said: “Bad debt is a chronic problem for SMEs and can lead to staff cuts, delayed investment plans and – at worst – insolvency.
“SMEs across the country must take steps to prevent late payment and non-customer payment from affecting them, particularly at a time of uncertainty when suppliers may look to squeeze payment terms for their own benefit.”