eprivateclient

SMEs lose £2.2 billion as customers fall into administration during lockdown

News Team, 09/10/2020

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...


Continue reading this article...


Start a free trial now for access to breaking news of the regulatory environment and legislative change happening in wealth management.







You are currently not logged in,
login to view the full article
start by clicking this button.





Need a subscription,
fill out the form here or
contact subs@eprivateclient.com


About PAM

PAM Insight is the world’s leading independent provider of essential specialist news, analysis and comparative data for the fast-evolving world of wealth management.

Read more about PAM

Subscribers

eprivateclient is the leading website and news service for private client practitioners, including lawyers, accountants, trustees and fee-based IFAs.

Read more