Small and mid-sized UK businesses are owed more than £55 billion in unpaid or outstanding invoices, a new study has revealed.

The study, conducted by the European payment systems provider Sage Pay, has found the average business is owed £11,358, with one in five owed more than £30,000.

Despite political pressure on larger corporations to pay their smaller suppliers on time, the sum has increased by over 50% since last summer. This has the effect of stifling growth and restricting cash flow for small businesses.

67% of SMEs said they still use paper invoices and spend the equivalent of two weeks per year chasing unpaid invoices. For one in ten companies, a third of invoices are paid late.

Simon Black, CEO of Sage Pay, said:

“The majority of invoicing is still done via paper and post. Given the environment we’re now living in, this process is not antiquated, it’s actually depriving small businesses of critical revenue. For smaller businesses in particular, this delay in payment can cause significant problems and can affect the overall performance of the company.”

The study calls for SMEs to re-think their invoicing strategies and urges more businesses to adopt e-invoicing, which would enable them to keep a more efficient track of invoice payments. Mid-sized companies are already leading the way, with 85% saying they have already adopted digital invoicing processes.

Mr Black concluded:

“Businesses of all sizes need to look at a more seamless, automated invoicing process so they can focus on running and growing their business – rather than chasing money owed or spending their time on bookkeeping and administration.”