Over Half of Small Businesses Face Cashflow Problems
Late payment cited as major concern for small, established businesses despite 84% recording profits
Over half (54%) of small businesses are experiencing cashflow problems, according to a new report, with late payments cited as a major reason for financial concerns by 29% of business owners.
The findings, which came from a recent One Poll survey of 500 businesses, found that cashflow was one of the main challenges to established small companies. Businesses that launched between 2000 and 2007 were the most concerned about cashflow (67%), while those who set up in the 1980s were the least worried (35%).
The issue of late payment affecting small business’ cashflow was brought up earlier this year when reports revealed that small and mid-sized businesses are the worse effected by late payment – making it more difficult for them to invest in growth and pay existing expenses.
Other barriers to growth listed by the survey’s respondents were access to funding (26%) and managing finances (17%). Despite these challenges, the survey revealed that 84% of small businesses are profitable, with 34% profitable from the first day of trading. Gary Turner, managing director at Xero (who commissioned the survey), emphasised the potential for the economy if small businesses can remove cashflow problems:
“Earlier this year, the International Monetary Fund disclosed that the UK was the fastest growing economy in the developed world in 2014. Rather than limping along financially, if more small businesses succeed in improving their cash collection, just imagine what this could do for their growth and that of the wider UK economy.”