SMEs across the UK are counting the cost of the lockdown as they prepare for a testing final quarter of 2020.
Risktech business Nimbla, surveyed 2,000 UK SMEs and found that £2.2 billion in revenue (for goods and services provided during lockdown) has been lost because those customers fell into administration. A number that is set to increase dramatically over the course of the next year.
More than a third (38 percent) of SMEs are still waiting to be paid an average of £59,013, for work they completed before the lockdown.
Worryingly, a fifth (21 percent) of these companies believe they will never recover the full amount, losing on average £24,903 because those customers have gone into administration. Looking at the bigger picture, this is worth £2.2 billion in revenue across all SMEs (with outstanding payments) that will not be realised.
Businesses reported, on average, six invoices go unpaid every year with half of these worth £41,193 written off due to their customers becoming insolvent. Yet, surprisingly, only four percent of business owners take out trade credit or invoice insurance, which protects the supplier against their customers’ insolvency.
Business owners do spend time thinking about a potential insolvency event with their customers. In the event that happened, most of them (83%) would continue trading but the impact on cash flow would lead to changes in asking customers for deposits, requesting shorter payment terms, declining larger projects and fear their credit scores falling.
Business owners spend, on average, two weeks chasing an invoice payment which eventually was never paid because the customer became insolvent.
Flemming Bengtsen, CEO at Nimbla c...