West Midlands SMEs ‘in the dark’ over money owed – Bibby
MORE than a third of small and medium-sized businesses in the West Midlands are in the dark about how much money they are owed in unpaid invoices, research by funder Bibby Financial Services has revealed.
In total, 41% of SMEs in the region were unable to say how much they have outstanding. Of the businesses that did know, more than a quarter (27%), said they were owed more than £20,000 and 8% were owed more than £50,000.
Some 2% were owed in excess of £100,000.
Sharon Wiltshire, MD for Bibby Financial Services in the West Midlands, believes the findings highlight on-going difficulties small businesses face in managing credit control. She said: “Having a robust credit control process in place, and being able to chase invoice payment is the key to effective cashflow management which is critical for any business.
“But many small businesses – particularly those with few or no employees – cannot effectively manage outstanding payments because they are focused on developing new business and fulfilling existing orders.”
The findings of the study – conducted among 1,000 UK small and medium-sized enterprises in Q3 – represent a barrier to growth for thousands of small businesses throughout the country, Bibby suggests.
The issue is particularly acute in the hospitality sector, with two thirds (67%) unsure of the amounts owed to them. Meanwhile, almost four in ten (39%) transport and distribution firms admit to being unclear about what was in their payment pipeline.
Wiltshire added: “This represents a significant amount of money owed to UK SMEs and the value of these outstanding invoices could be reinvested into businesses in the form of recruitment or technology.”
The specialist funder is calling for more businesses to consider forms of finance that help bridge the payment gap, or to consider outsourcing the collection of payments to specialist providers.
