CM October 2020

CMNEWS
A round-up of news stories from the
world of consumer and commercial credit.
Written by – Sean Feast FCICM
David Postings,
Chief Executive
of Bibby Financial
Services
Pressure mounting on SMEs as
Ministers demand return to work
THE majority (55 percent) of UK
SMEs are being paid later as
a result of the pandemic in a
trend which is threatening the
economic recovery.
A report by Bibby Financial Services
(BFS) suggests that more than a third
(36 percent) of SMEs have seen payment
times increase by more than three
weeks, while 28 percent have seen an
increase in bad debt. More than one in 10
(12 percent) have customers who refuse
outright to pay money owed.
As the economy begins to restart,
Bibby believes these financial pressures
are hindering the ability of SMEs to get
back to business. Some 14 percent of
SMEs have been forced to turn down new
business as the money they need to buy
raw materials is wrapped up in unpaid
invoices, and one in 10 (11 percent) have
had to keep staff on furlough who they
need to bring back to complete work.
While there is a clear economic cost
to SMEs, there is also a personal one.
SME owners are struggling to balance
the financial pressures of the pandemic
with their own wellbeing with a third (34
percent) admitting to not having a single
day off since the start of lockdown and
27 percent citing a deteriorating work life
balance.
The research shows that 56 percent
of SMEs will be unable to meet their
running costs beyond 12 months as poor
payment practices complicate already
stretched supply chains. Nearly a quarter
(22 percent) of UK SMEs have lost a
supplier already due to the business
closing and 12 percent admit to delaying
a payment to a supplier in an attempt to
manage cashflow.
David Postings, Chief Executive of
Bibby Financial Services, says pressure
on SMEs is reaching an unsustainable
level: “Everyone likes to talk about SMEs
being the backbone of the UK economy
and they clearly have a critical role to
play in the country’s economic recovery,
but too often we lose sight of the people
that run and work in them. There are 5.9
million SMEs in the UK, often employing
fewer than 10 people, and for businesses
of that size, it’s personal.”
Advancing the credit profession / www.cicm.com / October 2020 / PAGE 5