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SMEs Struggling with Cash Flow Management

According to a new report, nearly 1 in 6 small businesses in the UK are ‘very’ concerned about managing their cash flow effectively over the next 12 months. A further 27% are ‘quite’ concerned about the same matter, according to a new study by Santander. This shows what a widespread issue cash flow is amongst small businesses, and highlights how important it is to have this particular aspect of your business management under control.

Around half (46%) of businesses reported being hit by at least one recent cash flow set back. Unsurprisingly, late or failed payments topped the list of causes (24%) with weak sales (8%) and unexpected costs and charges (7%) taking the next two top spots. Cash flow problems can be caused by a variety of factors, especially unexpected ones, so it definitely pays to be on top of your cash flow.

Another thing highlighted by this survey was that the larger the business, the less they tended to be worried about cash flow. Larger businesses, with annual revenues between £5m – £20m, were only ‘very’ concerned in 6% of cases, whereas businesses with annual revenues between £500,000-£1m replied with 14%, and 22% in the £250,000 – £500,000 bracket.

Marcelino Castrillo, head of SME at Santander Corporate and Commerical, commented, ‘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.’

Indeed, invoice finance could be one solution if your business is struggling, especially if you’r suffering from late payment problems. With factoring or invoice discounting, you could unlock the funds tied up in unpaid invoices all within 24 hours – helping you to spend more time managing your business, and less time worrying about cash flow.

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