New research has revealed that British SMEs are owed more than £500 billion in outstanding invoices, an increase of more than 70% in two years.

The latest Lloyds Bank Commercial Banking Business in Britain research also found that the problem is likely to get worse during 2016, with almost 30% of small businesses expecting more of their customers to demand deferred payment terms in the next six months.

UK SMEs also own almost £2.5 trillion of assets that could be used to fund further growth, again a huge 220% increase on 2014, when Lloyds Bank found that small and medium-sized businesses owned a total of £770 billion in assets.

Together, the figures suggest that a lack of understanding of alternative funding options is holding British businesses back, says Lloyds.

Businesses in Sussex, Surrey, Hampshire and Dorset were apparently owed the most in outstanding invoices (£109,000 on average), while those in Scotland were owed the least (£79,000). Those in London and Essex owned the most valuable assets (£670,000) but owned the lowest proportion of those assets outright (72%).

The research also found:

• Around 17% of SMEs admit to having cashflow problems (2014: 19%)
• Almost a third (31%) said that late payment was the biggest cause of cashflow difficulties. A further 11% blamed defaults by customers.
• The average SME is now owed £100,000 in outstanding invoices (2014: £60,000)
• One in four businesses (25%) are owed £200,000 (2014: 10%)
• The average SME has more than £600,000 in physical assets (2014: £240,000)
• It also owns more than three quarters (77%) of those assets outright (2014: 65%)

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