Small business bank accounts face soaring debt levels

Small business bank accounts have been facing soaring debt levels arising on late payments on business loans, one research study has recently found.

Research recently conducted by Sage, a business management software company, has revealed that more than one out of every three small business owners report that making late payments has become a problem that has grown in seriousness over the past six months.  Sage polled in excess of 1,000 SMEs, or small and medium-sized enterprises, to gather the data regarding venture capital lending payments.

Sage additionally found that many businesses have also experienced a worsening in their cash flow situation over the same six months.  The survey found that 30 per cent of SMEs reported the decline in revenue, said sage.

There is more than £24 billion in business lending debts currently outstanding by small businesses in the UK, according to a recent report by Bacs.  It was found that entrepreneurs have had to wait an extra 39.2 days on average past their agreed payment terms.

35 per cent of SMEs feel that larger businesses in the UK are the most responsible for delaying payments across the business lending industry, according to the research findings.  However, only one out of every ten SMEs would be in favour of charging interest on an outstanding debt if a company neglected to pay it in a timely manner.

Sage One marketing manager, Michael Barber, commented on the research findings by stating that one of the many important lessons that a significant proportion of SMEs have learned from the economic downturn is how key it is to have a healthy cash flow.  However, many SMEs have had difficulties both chasing and tracking late payments over the past six months.

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