Small businesses hit by £2.2bn due to customers going into insolvency

UK small-and-medium-sized businesses have written off £2.2bn in revenue because their customers have become insolvent during the lockdown, a new report suggests.

The research, commissioned by risk tech firm Nimbla, reports that more than a third of 2,000 SMEs surveyed (38%) are still waiting to be paid on average £59,013 for work they completed before the lockdown. A fifth (21%) believe they will never recover the full amount, losing on average £24,903 because those customers have gone into administration. This is worth £2.2bn in revenue across all SMEs, with outstanding payments, that will not be realised, the report says. 

This figure is set to increase dramatically over the course of the next year, Nimbla says.

Businesses surveyed report that on average, six invoices go unpaid every year with half of these worth £41,193 written off due to their customers becoming insolvent. However, only 4% take out trade credit or invoice insurance, which protects the supplier against their customers’ insolvency.

In other findings, SMEs expect to make on average £263k revenue to the end of the year but 60% fear they won’t get paid because of expected insolvencies.

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