More than 308,000 SMEs were in financial distress at the end of Q2 2017, according to Begbies Taylor in their analysis of the financial health of UK companies. Overall, there was a 25% increase in companies experiencing financial difficulties, the largest annual rise since 2014 – with SMEs accounting for most of the increase.

There are a number of reasons for this, in addition to the ongoing impact of Brexit and political instability following the election, rising operational costs have also added to the burden.

The Federation of Small Businesses recently reported that the operating costs for small businesses are at the highest level for four years with spiralling energy bills that have increased by 43% and the financial pressures of adhering to changes in the National Living Wage – which is projected to increase further to £8.75 by 2020.

Compounding the problem, late payment remains a significant issue – Government figures show that £26 billion of trade debt is owed to SMEs. The changes in late payment regulations have been welcomed but concerns have also been raised that large corporates could find ways around the new regulations, for example, by negotiating longer payment terms.

However, the new rules, which includes a compulsory requirement for large businesses to publish a report twice a year on their payment practices including the average time taken to pay supplier invoices, are a positive step in highlighting the issue which causes 50,000 business to close each year and that, if successful in resolving the issue, could help to add £2.5 billion to the UK economy.