Cashflow Causing Problems For 38% Of Small Businesses

12% of small enterprises either came close to or became insolvent due to cashflow issues, with firms in the North East the most affected

Cashflow Causing Problems For 38% Of Small Businesses

38% of UK small businesses have struggled with cashflow issues over the past two years, according to research by Amicus Commercial Finance.

A survey of 500 business owners revealed that 65% of medium enterprise owners, those with between 50 and 250 staff, have experienced similar problems – with 65% of all those surveyed admitting it was the biggest challenge they face.

Worryingly for businesses, their concern seems justified as 12% of respondents came close to or became insolvent due to cashflow issues – with 15% still suffering from liquidity problems.

When dived by region, firms in the North East are the most affected, while when broken down by sector, 35% of accountancy firms admit they themselves have financial complications.

When quizzed about the biggest challenges caused by cashflow shortages, paying suppliers came out on top by being cited by 41% of respondents.

This is followed by meeting debt repayments (30%), buying inventory (29%) and paying staff (24%), while 18% said they had even lost contracts due to cashflow problems.

John Wilde, managing director of Amicus Commercial Finance, said:

“Our research shows that most small firms recognise the damage caused by cashflow problems but that doesn’t guarantee their immunity. The worst case scenario is insolvency but in our experience, slow paying invoices are often to blame.

“As working capital and cashflow are by their very nature dynamic, most traditional systems have failed to keep pace over the last few years.”

Do you struggle with cashflow problems? This guide will help.

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