Small-and medium-sized companies in Britain are almost twice as likely to access business-to-business loans than firms on the European continent, according to new research from auditor Mazars. Revealing a stark difference in attitudes towards working-capital policies between Europe and the UK, the study showed that 60% of UK SMEs had used trade credit at some point in the past six months, compared to a Europe-wide average of 32%.

Covering a period between 2008 and 2013, the study examined SME financial behaviour in Germany, Sweden, the Netherlands, Portugal, Spain, France, Ireland and the UK. Almost half (45%) of the UK SMEs surveyed admitted to using bank overdrafts, credit lines and credit cards – significantly more than the average of 39% across Europe. However, it SMEs in neighbouring Ireland who were the most likely to use this form of credit (60%), while Swedish firms were the lowest users at 7%.

The average number of days to make repayments also varies considerably across Europe – with a large gap between the best performers in Sweden, averaging 35 payment days, and worst country Spain, whose SMEs took 97 days to complete payments. Comparatively, the UK average is a middling 44 days. Mazars’ findings suggest some European SMEs will need to focus on improving working-capital management, as late payments can cause significant financial problems for small businesses and create a need for extended financing.

Mazars UK head of SMEs David Smithson said bosses from across Europe’s worst performers must wake up to the dangers of poor debt management before it’s too late. “Financial discipline and a focus on investing in the core business is a hallmark of a successful SME business,” he said, “particularly for companies operating in countries such as Germany and Sweden. Yet many of the European SMEs that we examined were distracted by ancillary or non-core business investments. As such, the access-to-finance debate – which is very prominent within the SME market – also needs to consider lessons learnt from the financial crisis in order to ensure that these companies have adequate funds for their business in the long term.”

Simply reviewing those lessons, though, won’t be enough. “These policies and procedures must also be hardcoded into practice,” Smithson added. “SMEs should ensure that their working capital policies and procedures are both rigorous and carefully controlled. They also need to have clear guidelines on how to accept or reject new customers, and must focus on areas such as price negotiation and credit terms in order to reduce the prospect of excessive bad debts and cash-flow difficulties. For any SMEs that want to compete successfully in Europe, attention to all of these areas will be vital.”