The average amount of debt written off by small and medium-sized businesses (SMEs) last year was £11,708, according to recent research.
The findings show that 76% of SMEs wrote off debt during 2015, totaling just under £50bn collectively, or £134m every day. In addition, one-in-five SMEs are experiencing cash-flow problems according to the research, with 8% currently using invoice finance, and 19% planning to do so in the future, including 11% in the next 12 months.
It seems that non-payment of debt is a significant problem for SMEs. Amicus Commercial Finance, the organisation which undertook the research, studied 500 businesses and found that medium-sized firms employing between 50 and 249 people were the worst hit by delayed invoice payments, resulting in an average loss of £33,750 a year through unpaid debts.
So what are the reasons behind non-payment of debt? The study found that the biggest challenges including paying suppliers (according to 41% of business owners), meeting debt repayments (30%), buying inventory (29%) and paying staff (24%).
One of the problems SMEs face in this context is that of underinsurance. Research by insurance group, RSA, shows that 88% of insurance brokers see underinsurance as a problem for SME clients, which suggests that many do not have sufficient coverage in the event of experiencing unexpected issues.
We are here to help you so please get in touch if you are experiencing any of the problems above.