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UK small and medium enterprises (SMEs) are under pressure from suppliers billing quicker coupled with fewer companies paying within agreed payment terms, according to research from HSBC.

The survey of senior decision makers at 596 SMEs also revealed that many companies are "overly reliant" on their savings and overdraft to fund cashflow and major investments.

40% of SMEs were found to be raiding savings, with 24% relying on overdrafts to manage everyday finances.

HSBC's research found that 18% of small businesses had reported suppliers were quicker to bill, with a further 20% experiencing fewer companies paying within agreed payment terms.

Noel Quinn, head of commercial finance for Europe at HSBC, said: "Our research tells us that many are still turning to their own personal wealth or overdrafts to fund their businesses and there are often more suitable solutions."

He said options such as asset finance can help companies to capitalise on their assets when borrowing for growth and international expansion, while invoice finance "can remove the headache of late payments and debt collection".

The bank has suggested a number of 'dos and don'ts' in order to stay in control, which includes keeping cashflow budgets up to date and avoiding unnecessary or excessive expenditure.

It also suggests companies chase debts as soon as they become due and keep records of everything that is said, but not to offer further credit to customers who are not paying.

Quinn said: "Quicker billing and longer payments can put pressure on small businesses and form an unsustainable cycle but SMEs can break this cycle."

He added: "Some may benefit from a review with their business bank, and our experienced relationship managers are working in partnership with businesses to help assess their financial requirements and help them on the right path."

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