SMEs in the UK are confident about growing their revenue over the coming year, but have voiced concerns over late payments and paying for insurance, according to new research from leading insurance premium finance company Premium Credit.

Premium Credit’s Insurance Index, which tracks insurance buying and how it is financed, showed that the majority of SMEs (83 per cent) expect revenue to increase over the next 12 months, with over half (53 per cent) forecasting that revenue will rise by up to 10 per cent.

However, despite this optimism, challenges related to the late payment of bills and invoices are restraining growth plans. Approximately two-thirds of SMEs (38 per cent) said that the issue of late payments had increased over the past year, with just 16 per cent reporting an improvement on late payment issues in that time.

With late payments a growing concern for SME owners, the government is set to take action on the issue in the form of a new 60-day payment terms cap for all large companies paying smaller suppliers, as well as mandatory interest of 8 per cent above the Bank of England base rate for late payments on all commercial contracts.

Asked about the main reasons for optimism regarding their revenues, many SME owners cited growth plans. 39 per cent said they are planning to launch new products and services and 35 per cent are planning to expand into new markets.

29 per cent, meanwhile, reported having successfully cut costs and 27 per cent said they are optimistic that challenges relating to the cost of living will ease over the next 12 months.

The most common challenges cited by businesses that expect to shrink in the next year were domestic and global economic issues. Close to a third (31 per cent) expect the UK economy to contract, while approximately a quarter (24 per cent) predict the economy will stagnate.

26 per cent, meanwhile, expect the global economy to remain volatile, while a fifth blamed their lack of optimism on government tax increases, such as the rise in Employers’ National Insurance.

Premium Credit Chief Sales Officer Owen Thomas said: “Many SMEs are optimistic about the year ahead and focused on overcoming the challenges from the UK and global economies as well as tax increases.”

“However cashflow clearly remains a major concern and a constraint on growth, with late payment of bills a growing issue that underlines the need for solutions that help firms manage their cashflow.”