UK SMEs Have Not Experienced Benefits of Declining Inflation – iwoca Research Study

Almost half (49%) of small businesses in the UK stated that they have not benefited in some way from falling inflation this year, according to a new poll commissioned by iwoca — one of Europe’s SME lenders.

The research study, which comes ahead of the ONS’s latest inflation statistics, reveals that the “cost of doing business” is quite high for around half (50%) of the United Kingdom’s 5.6 million small and medium-sized companies (SMEs).

Increasing overall costs have affected the overwhelming majority of small businesses, with merely 15% of SMEs reporting that they have “not experienced cost increases” during the past 6 months.

Although households are preparing for a 9% increase in Ofgem’s energy price cap this coming winter, small businesses in the UK are currently feeling the heat.

According to iwoca’s market survey, about a third (28%) of UK firms cite increasing  energy bills as their most significant cost increase, meanwhile, a quarter (23%) point to “business supplies being more expensive.”

With costs going up, almost half (45%) of small businesses in the European nation now predict that they will have to “raise their prices over the next six months.”

Almost two-fifths (37%) expect their prices will increase by “more than 5%, and one in five (20%) predict a spike of more than 10%.”

As covered last month, 1 in 6 B2B sellers (suppliers) are offering business customers over two months to pay their invoices, according to a new joint report from economic consultancy Cebr and iwoca.

The report Credit Where It’s Due, commissioned by iwoca––one of Europe’s largest small business lenders––reveals the number of suppliers “offering repayment terms over 60 days to customers has surged from just 7% of suppliers in 2020 to 17% in 2024.”

This comes as more businesses are asking “for payment flexibility from their suppliers.”

84% of suppliers say they have to adjust payment terms for business customers, “nearly twice (46%) the rate four years ago.”

Suppliers are having to adapt to this payments landscape in order “to secure sales.”

Two in three (66%) of B2B sellers report that “offering trade credit increased their number of sales.”

Three out of four (75%) suppliers offer longer repayment terms “for loyal or large customers, or for bigger orders.”

On the other side of the deal, 48% of surveyed business customers reported avoiding using “a supplier, or considering doing so, due to short or non-existent payment terms.”

Although a welcome trend for buyers, the report finds outstanding payments in 2024 are “more common than they were at the height of the pandemic.”

Around half (48%) of UK based suppliers serving business customers are now owed in “excess of £10,000 from their trade customers, up 13pp from 2020 levels.”



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