£7bn owed to UK construction SMEs

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New figures have revealed construction SMEs across the UK are owed £7bn in unpaid invoices…

Research carried out by the Asset Based Finance Association (ABFA) has found the construction industry in the UK is owed £7bn in unpaid invoices. The figure amounts to 16 per cent of annual turnover in the sector.

The research revealed a bleak picture for British SMEs across the board, with £67.4bn outstanding. Manufacturing and the construction industry were among the sectors owed the most money.

Additionally, a separate study by the ABFA found on average construction businesses wait 107 days for payment of invoices. Comparatively, manufactures wait 61 days.

ABFA said the overall figure owed to SMEs has increased from last year, seeing an eight per cent rise. Since 2011, the figure has increased by 36 per cent.

ABFA Chief Executive Jeff Longhurst said: “The scale of unpaid invoices to Britain’s SMEs has become enormous, but there is no reason for it to become a barrier to investment and growth.

“Businesses need to recognise that their unpaid invoices are an asset. In many cases, they are the most valuable asset an SME has, and they can be the key to unlocking critical and affordable funding.

“Invoice finance is playing a bigger role than ever in funding British and Irish businesses’ growth, and it is now an established part of the funding mix for a huge number of SMEs. But it can also help many more businesses.”

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