UK SMEs are forging ahead with their growth plans, despite widespread disillusionment in the financial markets, according to a report by the Asset Based Finance Association (ABFA).

Almost three quarters of SMEs surveyed by the ABFA said they would be following through with their growth plans, with around half expecting to increase borrowing in 2008, and a good 67 per cent of respondents remaining confident in their capacity to secure that funding.

The report echoed the Government’s Annual Small Business Survey, conducted earlier this year, where 66 per cent of SMEs voiced plans to expand their businesses over the next two to three years.

Common to both reports was concern over the issue of late payments. Over a third of ABFA respondents said chasing payments was putting their business relationships under strain, and the Annual Small Business Survey highlighted it as a growing problem.

Maurice Craft, chair of the ABFA’s Invoice Finance Group, claims that if UK SMEs are to fulfil their potential, certain barriers to expansion need to be addressed. The impact of late payments on cash flow was cited as a major stumbling block.

He says: “There are options available to companies such as factoring or invoice discounting which removes the burden of chasing late payers and gives the guarantee of invoices being paid quickly, allowing the company directors to concentrate on growing the business.”

Obstacles to growth thrown up by the Annual Small Business Survey included market competition (15 per cent), regulation (14 per cent), tax, VAT, PAYE, NI and business rates (12 per cent), the economy (10 per cent) and cash flow (10 per cent). Only 2 per cent of SME employers failed to cite any challenges to growth.