Cash concerns for SMEs across the UK
Smaller businesses in the UK market are constantly experiencing cash-flow issues which could be having an adverse impact on potential growth.
Almost 50% of more than 500 small business owners expressed financial concerns when questioned by short-term digital lender Everline.
Approximately 70% said access to cash flow was crucial, while 29% admitted it was actually preventing them from growing the business.
A further 23% had been forced to suspend marketing operations, while 28% paid suppliers late as a result of cash-flow issues.
This enhances the chances of financial difficulty for these companies and could lead to administration for many companies should they have consecutive months of financial problems.
Calling on the services of insolvency specialists
Some companies could call on the expertise of a corporate insolvency practitioner to help the situation, especially those in the 18% of companies who face a shortfall at least once month.
Late-paying customers were listed as a key factor for financial uncertainty, while many SMEs said trade varied seasonally and there was no way to combat the issue.
Around 81% of small businesses said their shortages were below £10,000 each month, but one in ten said they had been forced to find extra funds of up to £30,000.
Sole traders also expressed concerns, with 90% of them reporting a monthly cash flow shortage of up to £5,000.
This poses a significant issue for many, as it prevents expansion which could be seen as a driving factor to economic recovery.
Access to credit remains subdued, according to figures for the Funding for Lending scheme, with more than half of those who have applied for the scheme either experiencing rejection or waiting for feedback.
One in five SMEs applied for a loan in the last two years, suggesting that a significant number of businesses are looking for a means of finance.
In fact, more than two fifths of SMEs surveyed believe that conditions for lending are worse than before the economic downturn.
As a result, many are choosing not to borrow which could consequently delay any signs of economic recovery.
By Phil Smith