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How SMEs can manage payments late and new

Late payment is a subject that needs no introduction, but small business owners also have to contend with the demands of new mobile payment technology. Alternative finance has a role to play in shouldering the burden.

Late payment of invoices is a problem that seemingly no one can fix. There has been no shortage of rhetoric and related promises, not to mention initiatives and schemes, but late payment continues to hamper SME growth. Just how much has been underlined again by new data from the Zurich SME Risk Index. According to the index, over half of small businesses in the UK are owed £255 billion in late payments. This eye-watering amount paints a clear picture of why the matter weighs so heavily on small business owners.

Another indicator of the ongoing failure to address the problem of late payment is the rising number of county court judgements being brought by SMEs. According to new figures from Ormsby Street, the number of these judgements, whose average value was almost £5,000, rose by 23% in the second half of 2015. The move to lift the ban on SMEs using invoice finance with regard to unpaid invoices may well shift the balance of power, but righting this wrong will not be a quick process.

Unpaid invoices aren’t the only payment-related matter putting pressure on SME cash flow. According to Paym, the number of payments made using mobile devices rose by 89% to 1.46 million transactions in the second half of 2015. With the use of mobile devices and the popularity of online shopping growing exponentially, a company that doesn’t embrace this trend and its technology will soon get left behind. Standing still isn’t an option and embracement doesn’t come cheap.

Like those relating to pension auto-enrolment, the costs of new technology have to be borne, just as those linked to late payment have to be swallowed. Invoice finance, peer-to-peer lending and other alternative finance services, whether used in conjunction with or instead of traditional finance products, offer business owners an affordable, flexible and transparent way of managing this burden.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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