Many British businesses are struggling to cover expenses, pay debts and invest in their businesses, with 49 per cent admitting cash flow is an issue, according to new research from Shawbrook, the specialist UK bank.
An increase in costs (46 per cent) and late payments from clients (37 per cent) are the leading reasons behind these cash flow issues, with Shawbrook revealing that 10 per cent of businesses admit it is a significant issue.
Other factors affecting cash flow included slow sales (27 per cent), unexpected expenses (26 per cent), as well as volatility or seasonality in sales (25 per cent). Complex supply chains are also causing issues for a quarter of businesses (23 per cent).
Issues with cash flow have been a source of stress to businesses, with 38 per cent of decision makers saying it is impacting them and their senior management teams. Twenty-two per cent said it had worsened their own mental health and 30 per cent were concerned about the impact it had on staff morale.
Hampered cash flow also appears to threaten growth plans, with 30 per cent of businesses having to delay their plans, while a further 27 per cent have struggled to access funding. A number of senior figures have even picked up business expenses with their own funds (28 per cent), and 21 per cent are in arrears with their supplies.
Addressing cash flow concerns
In order to alleviate these issues, businesses have considered a business loan to make up costs (32 per cent), while others considered alternative finance products such as cash flow finance (24 per cent), asset finance (23 per cent), invoice finance (21 per cent), trade finance (19 per cent), a merchant cash advance (15 per cent) or asset-based lending (15 per cent).
Concerningly, one in 10 have considered closing their business due to problems with cash flow, with the same percentage contemplating a sale.
Neil Rudge, chief banking officer, commercial at Shawbrook, comments: “An essential aspect of keeping a business afloat is cash flow, ensuring you have enough working capital for processes to run smoothly, pay wages and cover expenses. But in times of economic uncertainty, this can be beyond the control of businesses, and we’re seeing this take effect globally, with many organisations having to make challenging decisions in order to remain solvent.
“Issues with cash flow take a toll on everyone involved, from heads of leadership to employees – but British businesses should remain resolute and seek support where they can. Businesses are the lifeblood of the British economy, and with the number of solutions at their disposal, there is no doubt that they can push through any challenge they are faced with.
“Finance can play a crucial role in helping businesses manage cash flow. Products such as asset-based lending and invoice financing, for example, allow businesses to smooth out their cash flow, creating more room for investment into the business.”
