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The economic perfect storm facing UK SMEs

There are 3.1 million companies trading on credit in the UK. Unfortunately, 1.4 million of these have had their cashflow negatively impacted by customers who don’t pay their invoices on time, with many more being subject to poor payment practices.

SMEs are the heart of the economy, and are often community-based. This has a huge impact on the local neighbourhoods that they live and work in. Job losses, business closures, family pressures, and poor mental health are not uncommon side effects.


The UK Government has put a charter in place to help SMEs get paid by big businesses and government agencies. However, there is a lack of support for SME to SME or business to consumer debt. The Government stimulus has given a distorted view of business performance since the start of the pandemic.


Pre-pandemic, UK SMEs were facing a £50bn late payment problem. 18 months later and this has grown significantly. Combine an increasing £100bn of unsustainable national debt (due to government support) with a lack of access to future funding options for businesses and it’s been predicted the insolvency rates of UK SMEs will rise significantly towards the end of 2021.

Adding other factors; Brexit, furlough ending, the abolition of the VAT reverse charge within the construction industry, zombie companies and fresh air invoicing, many business directors find themselves needing to repay the loans having used personal assets as guarantees against funding. There is undoubtedly a severe and unsustainable disruption to the UK economy at play.

Many firms will need to rethink how they manage their cashflow and optimise their working capital position. At itsettled we’ve pulled together a series of resources showing business owners how they can do just that:

Our automated cashflow & credit management platform has been specifically designed to help business owners and their teams. itsettled identifies payment risks, collects your invoices and improves your cashflow performance.

To arrange a free 30-day trial, please contact our Customer Success Manager Angharad at angharad@itsettled.co.uk.

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