Cash flow management can affect every aspect of a business’ growth, from its ability to hire new staff to servicing more customers and clients.
Reassuringly, you’re far from alone. Businesses of every size are dealing with late payments and the roadblocks they produce. Here are the 5 biggest cash flow concerns for British businesses.
Late payments – £26bn is owed to small businesses in the UK.
Retail consultant Mary Portas believes cash flow is the “lifeblood” of small British businesses, but is seriously concerned by how much money is owed to them. Small business owners are waiting 72 days on average for payments from larger companies, and 60% have waited 3 months for an invoice to be fully paid.
Bacs think UK small businesses are owed £26 billion, but accounting firm Sage believe it’s closer to £55 billion. As there are so many small businesses operating in the UK, it’s difficult to come up with an accurate figure, but every individual business owner will know how much they’re owed and how difficult it is to receive payment.
Cash flow issues are making it difficult for 54% of businesses to grow.
Problems with cash flow often result in uncertainty for businesses – it’s difficult to make decisions when the financial foundations feel shaky.
According to a poll of 1,800 international SMEs, 58% struggle to find affordable finance, 54% consider cash flow issues to be the main reason they’re struggling to grow, and 76% are relying entirely on the cash flow they do have to keep growing, even when it’s very limited.
70% of small business owners think cash flow problems could force them to close down.
Business owners are always planning for the future. Forward planning inevitably involves considering the negative scenarios along with the ideal, and 70% of small business owners can see cash flow issues being the reason they have to close their doors.
The Federation for Small Businesses believes 50,000 small businesses on the brink of closure would be saved if their invoices were paid on time.
“Late payments mean…knock-on late payments to suppliers” according to the Federation for Small Businesses.
When late payments add up, the knock-on effect is felt by the business directly and the businesses they then work with. Very often, late payments are a result of cash flow problems affecting a chain of businesses. One doesn’t have the cash flow to pay their supplier, so the supplier then struggles to pay their own invoices.
According to an FSB spokesperson, “Thousands of small firms go bust each year purely because the cash flow dries up, not because there’s anything wrong with the underlying business.” It can be their financial relationship with other businesses which causes fundamental problems.
29% struggle to pay for inventory and 18% have lost contracts because of cash flow issues.
When cash is scarce, related problems pop up all over the place. For 500 small business owners surveyed, 29% had issues when buying inventory, 24% couldn’t pay their staff on time, and 18% have “lost contracts due to cash flow problems”.
When cash flow is standing in the way of expansion and growth, Capify can help you raise up to 150% of your monthly credit and debit card sales. You only repay us when you accept a card payment from a customer, so repayments will always be manageable.
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