Half of SMEs concerned about cash flow

Robyn Hall

April 30, 2013

The research found that cash flow remains a significant challenge to large numbers of UK businesses with almost one in six (17%) respondent saying they were ‘very’ concerned.

Marcelino Castrillo, head of SME at Santander Corporate & Commercial, said: “Cash flow clearly remains a huge challenge for thousands of UK businesses.

“However many businesses are missing out on effective alternative financing solutions such as invoice or supply chain finance – or relying excessively on loans and investments – and in doing so, are opening themselves up to unnecessary cash flow volatility and business risks.”

Around half (46%) of businesses report being hit by at least one recent cash flow setback – with late/ failed payments from customers (24%), weak sales (8%) and unexpected costs and charges (7%) the top three reasons cited.

Larger UK businesses (those with annual revenues between £5m-£20m) are less concerned about cash flow compared than smaller companies with 6% saying they are ‘very’ concerned compared to 14% of firms with annual revenues between £500,000 – £1m and 22% in the £250,000 – £500,000 bracket.

However the research revealed greater use of cash flow management solutions such as Invoice Finance, Asset Finance and Supply Chain Finance by larger businesses: one in four (25%) firms with turnovers between £5m-£20m have used Invoice Finance or intend to over the next 12 months, compared to 12% with revenues of £500,000-£1m and 2% in the £250,000 – £500,000 tier.

Castrillo said: “It can be very beneficial for companies to take a regular review of their resources both in terms of cash flow and their wider business plann to ensure they have the best toolkit to equip themselves for managing payments and dealing with the unexpected hurdles that all businesses face from time to time.”

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