Bad debt fears hit exports

A study from Lloyds TSB Commercial finance said worry over how late payments from abroad would hit cash meant small and medium-sized enterprises (SMEs) are not exporting as many goods and services as possible.

It comes after Britain’s trade gap – the difference between exports and imports – recovered slightly to £7.1bn in January after hitting a six-year high the previous month.

The weakened pound has made British goods cheaper to foreign markets as a result of the downturn in recent years, creating foreign growth opportunities, but concern over bad debt from foreign partners and the administrative burden of trying to collect late payments are fuelling SMEs’ reluctance to export.

Nick Robson, regional director at Lloyds TSB Commercial Finance in Yorkshire, said: “Late payments negatively impact SMEs’ cash flow and can create barriers to business growth. The problem has been heightened by the downturn with more and more companies unable to pay their creditors.

“Taking into account the problems many businesses encounter with domestic invoices, concerns around late payments are heightened when the debtors are based abroad.

“Those responsible for credit control or business debt management commonly face the additional burden of having to overcome language barriers or coordinate working hours in different time zones.”

Last month the coalition launched a Trade and Investment White Paper to provide improved support to exporters.