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Strain on UK's small and medium property businesses remains severe

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Strain on UK's small and medium property businesses remains severe

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Published by Max Salsbury for 24dash.com in Housing and also in Finance

Strain on UK's small and medium property businesses remains severe Strain on UK's small and medium property businesses remains severe

Image: Housing via Shutterstock

Despite the UK's apparent economic recovery, the strain on the country's small and medium-sized property businesses (SME) remains severe, a survey has found.

According to the findings of online commercial debt recovery law firm Debt Guard Solicitors, each SME in the property sector was burdened with £512,000 of trade debt during the last financial year.

Micro-sized firms with less than 10 staff and a turnover below £2 million were proportionately the hardest hit, with each on average £58,000 in debt, accounting for 11% of turnover.

However, compared to the UK economy’s total business debt average of £1.3m, the property sector’s financial health was considerably better.

Small-sized firms with 10-49 employees and a turnover of £2m-£10m each had a far higher average trade debt of £584,000 - though this accounted for a more manageable 9% of turnover.

Medium-sized companies, defined as businesses with 50-249 employees and a turnover of £10m-£100m had by far the highest levels of SME trade debt at £2.9m. But this also accounted for a manageable 10% of turnover, with larger cash reserves also easing the situation.

The findings were based on official account details submitted to Companies House by 634 property SMEs spanning the commercial and residential sectors.

Mark Burgess, chief operating officer at Debt Guard Solicitors, said: This research highlights the financial headache caused by outstanding and unpaid bills in the property sector. It is clear that smaller SMEs in particular need much greater support in this respect, as many are facing the very real threat of closure due to trade debt pressure and late payment.”

The average time it took for all SMEs in the sector to receive payment from customers, known as debtor days, was 50 days - significantly above the typical 30-day timeframe.

Mr Burgess added: “Our message to all property SMEs suffering from late payment is, ‘don’t write off your debt’, look at legal ways to professionally recover it as, by improving credit flow, this will help put your business on a more stable financial footing.”

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