Recent research from Professor Nick Wilson of the Credit Management Research Centre has found that the UK is entering a period of economic recovery, hampered by an unprecedented £75 billion trade credit gap – almost £94 billion more than the last recovery.

This study has revealed that even if businesses were to pay their suppliers just five days earlier it would release an astonishing £29 billion in working capital. The devastating issue of late payment to small businesses is accentuated by the fact that if all invoices were paid on day 30, £199 billion in working capital would be released.

Oxygen Finance, a fully resourced service which enables large organisations to pay their suppliers in just a matter of days, rather than weeks, is setting about to transform the trade credit market place. Roberto Moretti, Chief Executive of Oxygen Finance Limited, commented on the findings: “This report once again highlights the pressing issue of late payment for smaller businesses and emphasises the trade credit chasm which SMEs are facing at this time. Oxygen Finance is making a significant difference, enabling larger organisations to provide early payment to their suppliers. Far more than a pure technology play, Oxygen Finance provides a fully resourced service and the heavy lift required to facilitate successful programme implementation.“

Trade credit is the granting of credit by non‑financial firms to their customers. Trade credit exceeds bank credit by 20%, currently sitting in excess of £327 billion.

Professor Wilson said about the study: “The analysis shows that the UK faces a very different business debt challenge in this recovery, one which will require a new, proactive, management approach to the use of trade credit if businesses are to thrive and survive.”

This deep rooted issue creates an additional impact on smaller businesses as Professor Wilson explains: “Not only does it demonstrate the SME’s reliance on trade credit, but also damages their future ability to secure finance with the banks.”

Professor Nick Wilson has held the Chair in Credit Management and Finance at Leeds University Business School since 1998 and is Director of the Credit Management Research Centre (CMRC). He is an Honorary Fellow of the Institute of Credit Management (FICM).