61% of invoices issued by UK small and medium sized enterprises (SMEs) remain unpaid within the debtor day period, according to research conducted for Amicus Commercial Finance. 

Of these, 70% of firms say they rely on getting paid during their debtor day period to avoid facing a shortage of working capital.

The research, conducted by Opinium online with 504 UK SME decision makers between 24–31 October 2016, found that 16% of SME invoices remains unpaid after 90 days and of these, nearly half have yet to be settled after six months.

Amicus said medium-sized businesses with between 50 and 249 employees are the worst affected by delayed payments with 24% of invoices remaining unpaid after their debtor day period or not at all.

According to the findings, SMEs’ top three customers on average account for 49% of their overall revenue.

Amicus Commercial Finance also examined the psychological impact on business owners caused by lengthy payment delays. 28% said it has caused them considerable stress and anxiety and 19% reported that their frustration had turned into anger. 10% admitted they became scared their business would go bust.

In order to mitigate the impact of late payments, growing numbers of SMEs are turning to invoice finance to secure reliable cashflow. While 8% of firms said they currently use invoice finance an additional 19% of business owners plan to use it in future, including 11% in the next 12 months.

“Invoice payment terms are all too often ignored and for small firms this can put their cashflow under intolerable pressure, particularly when late payers are also large customers,” said John Wilde, managing director of Amicus Commercial Finance.

“For business owners with healthy sales, the frustration of being forced to take out business loans or extend their overdraft to avoid becoming insolvent can be overwhelming.

“Given this, it’s understandable that small firms are increasingly turning to invoice finance as a way of converting unpaid debts into instant working capital. Here at Amicus Commercial Finance, we combine deep sector experience with a high-touch personal service and cutting-edge technology to make the process as straightforward and efficient as possible.”