A business expert has called on the UK government to do more to ease the cashflow problems faced by small businesses as a result of late payment, a problem that has made the alternative finance or peer-to-peer lender sector increasingly indispensable to small business survival.

Writing in City A.M., John Atkinson, Head of Commercial Business at Hitachi Capital Invoice Finance, claimed that UK SMEs were being “stifled” by a lack of funding from traditional banks whilst their very survival was threatened by the culture of late payment. Had it not been for peer-to-peer lender and other alternative finance platforms, many would have gone under. Mr Atkinson quotes research from Funding Options, which estimates that turnover losses caused directly by late payments and the funding shortage from banks has cost the UK £2.9bn in the last five years.

The good news it that the Small Business, Enterprise and Employment Act – which comes into effect next April – may ameliorate the problem. Designed to increase access to alternative finance, it requires banks to pass on applicants’ details to alternative lenders if they have refused credit. But with the Asset Based Finance Association (ABFA) reporting that the average waiting period for small businesses to have their invoices paid has risen to 72 days this year (one more than in October 2014), Atkinson thinks that the government must also outlaw late payments – an approach that has already been taken up in Australia, Canada and the USA.

Atkinson added that businesses, “should also be pragmatic and look for alternative ways to facilitate growth in the meantime”. Seeking a secured asset loan may be one of the fastest and safest options for small businesses in this predicament.