UK SMEs have written off £2.2bn in revenue because their customers have become insolvent during lockdown, according to research from Nimbla.

The risktech firm surveyed 2,000 UK SMEs and suggested the figure is even set to “increase dramatically” over the course of the next year.

Nimbla’s research found that 38% of SMEs are still waiting to be paid an average £59,013, for work they completed before lockdown, while 21% of these companies believe they will never recover the full amount – losing on average £24,903 because those customers have gone into administration.

The firm estimated that this adds up £2.2bn in revenue across all SMEs – with outstanding payments – that will not be realised.

Businesses also reported that an average 6 invoices go unpaid every year, with half of these worth £41,193 written off due to their customers becoming insolvent. However, Nimbla found that just 4% of business owners take out trade credit or invoice insurance, which protects the supplier against their customers’ insolvency.

Nimbla CEO, Flemming Bengtsen, described the impact that lockdown has had on SMEs as “astonishing”.

“Many have survived several attacks during the pandemic and now knowing they won’t get paid for the work they did is another huge body blow,” said Bengtsen. “There could be more bad news on the horizon for smaller businesses as high street chains face difficulties and potential insolvencies.”

Nimbla’s study also found that businesses are anticipating to make an average £263,000 revenue between now and the end of the year.

However, as customers seek longer payment terms from 30 to 60 days to settle invoices, the survey revealed that three in five (60%) business owners are nervous about not getting paid at all – with expectations that one in six customers will become insolvent before the end of the year.

“The current uncertain economic environment means doing business isn’t easy, it’s made all the more difficult with SMEs anxious about getting paid,” Bengtsen added.

“Trading on trust and confidence has deteriorated. It is time, as a collective, to bring this back. Business owners cannot afford to bury their heads in the sand; they should protect themselves and insure against the potential insolvency of their customers.”

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