6 in 10 SMEs fear they will not be paid due to customer insolvency as a result of Covid-19, reveals survey
7th October 2020 10:10 - Business Support
6 in 10 SMEs fear they will not be paid due to customer insolvency as a result of Covid-19: A survey of SME business owners has found that 60% believe they will face a shortfall in monies owed to them due to customer insolvencies.
The survey of 2,000 SMEs by risk-tech business, Nimbla, found that respondents fear that one in six of their customers could face going into administration before the end of 2020.
The research found that 38% of respondents have an average of £59,013 outstanding from customers for work carried out before lockdown measures were introduced. A fifth (21%) believe that they will not receive the full amount owed to them by customers, expecting to lose an average of £24,903.
When asked about losses due to unpaid invoices, respondents revealed that six customer invoices do not get paid every year, on average - with half of these (worth £41,193) written off due to businesses facing administration.
More than 8 in 10 (83%) businesses polled said that they were able to continue trading despite the shortfall in money owed. However, looking to the future they could do business differently by asking customers for deposits, setting out shorter payment terms and turning down larger projects.
The research found that if businesses were to receive the amount of money they are owed from customers, it would amount to an average of £263,000 by the end of the year, amounting to as much as £2.2bn ($2.9bn) collectively.
When respondents asked their customers how secure they were in going forward, six out of 10 (61%) said they were going steady financially and generally content with their business environment. However, only a quarter (26%) of the SME owners polled said they believed what they had been told by customers.
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