SMEs are worried about cash flow in the year ahead

/ Posted By - Bradleys Accountants / Categories - Advice for Small Businesses

Small and medium-sized enterprises (SMEs) in the UK are concerned about cash flow management in the next 12 months, according to a new survey.

Santander found that 44 per cent of UK firms were either ‘very’ or ‘quite’ worried when it comes to their coffers and a similar proportion say they have suffered from fiscal challenges recently.

Late or failed payment from a customer is the most common setback, affecting 24 per cent of respondents. This is followed by weak sales (eight per cent) and unexpected costs and charges (seven per cent).

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    “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,” said Marcelino Castrillo, head of SME at Santander Corporate and Commercial.

    Those struggling with cash flow management should seek financial advice, as there are many solutions that can help a company get control of the situation.

    “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 plans, 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,” Mr Castrillo continued.

    Regionally, it is companies in the north-west and the West Midlands that are most anxious about their cash flow, with 36 per cent saying they are ‘very’ concerned. This is much higher than the south-west where this figure is only eight per cent.

    Meanwhile, firms in Greater London are most afflicted by late or failed payment (41 per cent) and unexpected costs and charges (21 per cent). Therefore, it is no surprise that 34 per cent of businesses in the area are worried about cash flow.

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