Research by PennyFreedom.co.uk - one of the UK’s leading cash flow management platforms - has discovered that UK small businesses are presently seeking the payment of £61bn worth of unpaid invoices. It also revealed that two thirds of the six million small businesses have at least one late payment on their books with an average value of £15,370.

The money owed has increased by 20 per cent since this time last year and is enough to employ more than 2 million people out of work people - based on these people earning an average UK salary of £29,600.

Currently 5.1 per cent - or 1.74 million people - in the UK are out of work and experts predict a rise to 7.75 per cent unemployed when furlough schemes come to an end in mid-2021.

Up by 25 per cent on this time last year, the survey found that business owners and managers spend an average of two days a month chasing unpaid invoices and 26 per cent admitted to having three or more unpaid invoices on their books.

The survey also found that companies are being pressured to increase the length of their standard invoice terms - from an average of 33 days to 56 days - which is an increase of 69 per cent.  One in 10 businesses said that during the pandemic they had been asked for 60-day payment terms.  

During the study, business owners were asked for their comments about the upcoming lift of the lockdown - whether they felt prepared to return to normality - and 77 per cent stated that they were just as worried about the next twelve months, with 56 per cent saying that they felt unprepared or unsure of their position after lockdown.

When asked whether they thought the government had done enough for them during lockdown, 52 per cent of respondents said the support had been ‘okay’, with 34 per cent saying that the approach by government to helping businesses had not been good enough.

Colin Gunnel - PennyFreedom.co.uk co-founder - said:

“When we started PennyFreedom.co.uk our goal was to help businesses of all shapes and sizes improve their cash flow and financial stability and eradicate worry about late payments and that hasn’t changed. COVID may have changed the way we all do business, but late payments and outrageous payment terms must be a thing of the past. The damage it does to small businesses and sole traders can be immense, and we were shocked to see just how much is owed to SMEs right now. It’s no wonder so many SMEs in the UK are struggling to stay afloat, especially in industries more heavily affected by the pandemic.

We wanted to humanise these figures for people because, ultimately, they’re never just numbers on a spreadsheet. Prompt payment under agreed terms is imperative to keeping SMEs, the backbone of the UK economy, thriving and keep people in work. With unemployment set to rise again later this year the fact that so much money is owed is criminal.”