U.K. SMEs’ Bad Debt Levels Soar 70 Percent

New Bibby Financial Services research suggests bad SME debt in the U.K. is on the rise.

Reports Friday (July 14) said the average level of bad debt among SMEs in the country spiked by 70 percent in a single year, based on a survey of 1,000 small businesses. The value of bad debt, on average, now stands at $26,230 written off as unrecoverable.

Nearly a third of small businesses surveyed said government efforts to lower business rates would be a help to ease financial burdens, Bibby Financial Services found. Researchers noted that SMEs are calling for government support as the Spring Budget includes a business rates relief fund that has yet to come into effect.

Reports also noted that Bibby Financial Service’s report follows the Federation of Small Business’ survey released this year that found a fifth of SMEs would consider shutting their doors if business rates increased.

In an interview with one small business owner, The Telegraph found that SMEs want greater attention from regulators and government officials on the local business community.

“The local authority isn’t communicating with the local business community,” said Peter Jackson, a small business owner who recently closed one of his stores because of increased business rates. “The town center is a mess, with a frightening number of empty units. When I announced that we were leaving, no one from the local authority called to ask if there was anything that it could do to persuade me to stay.”

Jackson identified increases in VAT and the government’s auto-enrollment pension scheme as placing growing  financial burdens on small businesses.

Other entrepreneurs and small business owners are identifying concerns over the unfavorable foreign exchange rates emerging since last year’s Brexit vote.

“Small business confidence is down for the first time since the EU Referendum – this is due in no small part to surging operating costs, which are now at their highest in four years,” said FSB national Chairman Mike Cherry. “Many firms are still reeling from April’s bruising business rates revaluation. To add insult to injury, we’ve had news of the latest holdup to the £300-million [nearly $400 million] hardship fund promised to the hardest-hit firms in March,” he added, referring to the business rates relief fund.

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