Stephen Everett is Head of Product and Propositions, Global Transaction Banking at Lloyds Banking Group

With the British summer upon us and the nation beginning to wind down for the summer holidays, one thing that businesses across the UK don’t want to slow down is payments.

 Small and medium sized enterprises (SMEs) struggle with slow or delayed payments all year round and, in the worst case, slow or late payments can drive an enterprise into bankruptcy.

 The scale of the problem cannot be overstated – SMEs are owed nearly £500billion in outstanding invoices, while a third of businesses cite late payments as their biggest cause of cashflow problems, according to Lloyds Bank Commercial Banking’s most recent Business in Britain report.

 It’s no different to your employer not delivering your salary on time. If you’re saving for a summer trip and your pay packet is delayed indefinitely, then your plans are set back if not shelved.

 Equally, any business that has staff to pay needs to know it has the cashflow to do that. Not being paid on time by a customer can therefore be debilitating.

 The issue is particularly acute during the summer because finance departments across the country can find themselves short-staffed due to holiday leave. More than usual, businesses will experience delays.

If there’s a time to face up to the late payments challenge, it’s now.

 So what do business owners need to do? The basics are a good place to start. Being familiar with your clients’ payment processes, while using the right purchase order numbers in all correspondence will put you in good stead. A customer may look for any excuse to delay a payment so the best advice is not to give them any.

 Cashflow forecasting is another must. Being on top of what money is coming in and what is going out will enable you to spot a late payment as soon as it occurs. Being able to promptly chase up a delayed invoice, there and then, is better than noticing it too late.

 Yet even with the world’s smoothest accounting procedures, a late payment can often be unavoidable. For ambitious businesses that do not want to be held back by arbitrary cashflow difficulties, or want the flexibility to deal with any short term spikes in late payments, lending options such as invoice finance can provide that cashflow boost.

 Invoice finance works by effectively bringing in an intermediary to buy your unpaid client bills for a fee. This way, dormant cash on your balance sheet is unlocked and any late payments are effectively ‘cashed-in’.

 More businesses are finding it to be an effective way to navigate the cashflow minefield. The latest research released by industry body, the Asset Based Finance Association (ABFA), shows that invoice finance is more popular than it has ever been, with even the number of medium to larger businesses –those with annual turnovers of more than £50 million – using it jumping by 25 per cent in the past year a year.

 As the spectre of late payments looms at this time of year, financial diligence and options such as invoice finance can ensure that SMEs enjoy summer, just like the rest of us.