Businesses are having to contend with a sharp increase in the number of unpaid invoices, alongside the problems associated with the government’s coronavirus lockdown. Even when the restrictions start to relax, businesses across the country could be hit by cashflow difficulties.
According to data from Sidetrade’s unpaid invoice tracker, the average volume of unpaid invoices in the UK has increased by 217% since the World Health Organisation declared a pandemic. The average before this point was 16%, compared with 50% by 16th May. This figure is likely to increase further as more businesses begin to feel the financial pressures of the social distancing guidelines.
Difficulties of unpaid invoices
Sidetrade, a B2B artificial intelligence platform, monitors the payment behaviour of more than 3.7 million businesses, across six European countries, every week. Their analysis of 26 million invoices accounts for €54billion worth of financial B2B transactions. Their up to date information provides the latest details on how the coronavirus pandemic is having an impact on business cashflow across the continent.
In the UK, the average value of unpaid invoices has increased by 29% since 11th March (when the WHO declared a pandemic). Across all six countries (UK, France, Spain, Italy, Belgium and The Netherlands), the value of unpaid invoices has risen by almost 52%. France has been the worst affected with a 98% rise and The Netherlands has seen the lowest impact, with a 25% increase.
Support for businesses
To help support businesses through this turbulent time, the UK government has established a number of grant and loan schemes to provide some financial security. This includes the Bounce Back Loan (BBL) and Coronavirus Job Retention Scheme (CJRS), which have both had a large number of applications.
The latest Business Impact of Covid-19 Survey from the Office for National Statistics shows that 85% of businesses who are continuing to trade or paused trading had applied for at least one of the government schemes. 76% of the businesses had applied for the CJRS and 59% had deferred VAT payments.
Cashflow difficulties
However, even with these government-backed financial schemes, businesses are still concerned about the medium-term impact of the coronavirus pandemic. The ONS survey highlighted that just over a quarter of the companies questioned had enough cash reserves to last six months or more.
This means that the vast majority of businesses don’t have the finances to survive half a year if the situation doesn’t improve. The lack of cashflow and an increasing number of unpaid invoices will only worsen the situation. For companies to stand a better chance of surviving the Covid-19 pandemic they need to start recovering more of their late payments and reducing the value of debt customers have.
Late payments
At CEA Ltd, we work with a wide range of clients, from different sectors, to help them collect their unpaid invoices. Our team of experts will look into the financial standing of the debtor to enable them to come to an understanding on payment terms. We can tell the difference between those businesses that can’t pay and those that are simply holding onto the cash as long as possible.
In these uncertain times, it’s essential that all businesses work hard to reduce the value of their unpaid invoices. By getting the cash into their account sooner, they can help the business to survive.
For more information on our debt recovery services, contact the team today on office@cealimited.co.uk or call 0113 532 8350.
Find out more:
Early signs of recovery in the SME sector
Check eligibility for government coronavirus financial support for businesses
Rise in restaurant and pub insolvencies before coronavirus pandemic
10 ways to help your business financially during the coronavirus pandemic