With more than two million SMEs saying the issue they’d most like this month’s Budget to address is the problem of late payments, HSBC Commercial Banking has urged businesses to take action and ensure they have the right financial solutions in place to help manage cashflow over the long-term.

According to recent research, payments owed to SMEs have risen by almost 40 per cent in the last year to £26 billion and many businesses are caught in an unsustainable cycle of companies billing quicker and taking longer to pay.

Figures show that SMEs are being forced to wait up to six weeks after the agreed payment date to receive payment.

Yet just one in 10 businesses are currently using invoice finance to free up their cashflow according to research from HSBC Commercial Banking. With cash released – in most cases – within one day of the invoice being issued, invoice finance makes funds available which can enable SMEs to respond quickly and decisively in challenging market conditions.

With the recession placing increased pressure on UK businesses – 64 per cent of SMEs say that managing cashflow in the current economic climate is their biggest challenge for growth. Effectively managing cashflow is just one of the tips included in an online video launched by HSBC Commercial Banking which features a collection of stories from real businesses, practical advice from financial specialists and economists offering top tips on beating the credit crunch.

Noel Quinn, HSBC’s head of commercial banking UK, said: “We are urging businesses to ensure they have the right financial tools in place and are seeking appropriate advice to help them weather the storm. Ultimately a healthy cashflow is critical in a downturn and businesses do have the option, through invoice finance, of working with a financial partner to implement their payment collections on their behalf – allowing them to focus on the running of their business.

“We understand the pressure that businesses are under in the current climate and in a bid to alleviate some of the pressure we have already announced the availability of a £1 billion working capital fund which has been specifically designed to assist SMEs and make the day-to-day running of business more manageable.”

The 2009 Budget has provided little support for small businesses, says the Forum of Private Businesses (FPB).

The FPB’s chief executive, Phil Orford, said: “The Chancellor has missed a vital opportunity to produce a Budget for business survival and economic growth. We called for a real and sustained support strategy, acting as a catalyst for broader economic recovery, but instead we got a Budget that appears to be focused on the next general election.

“While some of these measures will benefit low-carbon companies and new technology start-ups, they will do little to restore business and consumer confidence and stimulate economic activity.

“Although the long-term unemployed will benefit from investment in job creation and training from 2010, nothing has been done to help businesses retain their existing skilled workforce, which continues to be decimated as a result of the recession.

“While welcoming changes to capital allowances and loss relief, the reality is that these will have only provide limited benefit to smaller businesses. In addition, restrictions to the new credit insurance scheme and the failure to address business taxes remain considerable barriers to business survival and growth.”