The value of small businesses’ unsold inventory has now hit £50.9bn (72.81bn), up 4% in a year from £48.8bn in 2014, according to Companies House data.
The Asset-Based Finance Association (ABFA), which analysed the data, said SMEs’ unsold inventory has accelerated in the last year. It suggested was as a result of the economy not expanding as quickly as some had hoped after the recession.
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The ABFA said that although SMEs will be keen to reduce any excess inventory, businesses facing issues with large amounts of unsold stock can ensure that it does not become too much of a burden on resources by using it to secure finance.
The ABFA said increasing numbers of businesses are using their excess inventory to access funding, with its recent research showing an increase of 67% in the last year, from £520m to £870m.
This form of asset-based finance is primarily used by medium-sized business but the ABFA says that there is considerable scope for SMEs to increase use of this funding source.
Jeff Longhurst, chief executive of the ABFA, said: "Many UK SMEs have found themselves sitting on large amounts of unsold stock after the recession – but businesses can still extract a lot of value from this inventory by using it as collateral and therefore lower their cost of borrowing."
"In this way they can reap the rewards of a fast-growing form of alternative finance. They can receive a quick decision from their funder and can focus their energies on revenue generating activity."
