Small business owners have revealed that cash flow is the biggest challenge for nearly half of the respondents.
Almost half (48%) of small to medium enterprises cited cash flow as the largest single challenge their business was facing, according to research by Millbrook Business Finance.
This was followed by the cost-of-living crisis (32%) and energy prices (30%).
The firm surveyed its database of SME owners and directors in October 2023 to establish the leading pain points for businesses.
Apart from cash flow, other issues businesses were facing included supply chain disruption (26%), inflation (24%), recruitment (20%), building overheads (15%) and unexpected tax bills (8%).
For those planning on taking out finance in the next 12 months, the most prominent reason was to smooth out issues with cash flow (40%), followed by buying machinery and equipment and releasing equity (20%).
Justin Amos, Managing Director of Millbrook Business Finance, said “It comes as no surprise that so many businesses are struggling with cash flow at the present time. Whenever the economy is weakened, late payments and suppressed customer demand become much more commonplace, and this can dramatically worsen cash flow for SMEs.”
“When you also factor in the ongoing cost of living crisis and painfully high energy costs then it’s no wonder businesses are facing significant financial challenges.”
How to Boost Small Business Cash flow
Small Business Cash flow is critical. Small Business Debt Collection is one of the most efficient ways to boost cash flow, and will help ensure that businesses get paid more quickly.
Small Business Debt Collection services help businesses to quickly and efficiently identify debtors, track invoices, and send out automated reminders for overdue accounts.
This allows business owners to spend less time collecting late payments, freeing up more time to focus on the running of their businesses.
Having an effective Small Business Debt Collection process in place helps to ensure that cash is flowing freely, and businesses have the resources they need to succeed.
In addition to Debt Collection services, there are a number of other strategies that can be used to boost small business cash flow:
• Utilizing invoice factoring services to provide immediate liquidity;
• Renegotiating payment terms with customers;
• Offering early payment discounts or incentives;
• Utilizing credit cards for purchases or loans to cover short-term cash flow gaps; and
• Accessing government grants and other forms of funding.
By implementing these strategies, small businesses can improve their financial health and have the resources necessary to grow and thrive.
Rate of Small Businesses closing in the UK
There has been a recent spike in UK Small Businesses closing it seems.
According to the statistics, in 2020 alone, more than 38% of UK businesses had closed due to the COVID-19 pandemic.
This is a massive increase compared to 2019 when only 12% of businesses were closing. The economic hardship caused by the pandemic has had a profound effect on many small businesses who may not have been able to weather the storm.
The government has introduced a range of measures to support small businesses. This includes introducing cash grants, extending existing loans and providing business rates relief.
Despite this, many small businesses have not been able to survive the pandemic’s financial impact, leading to an increase in closures.
Fortunately, there are steps that business owners can take to help protect their businesses in the face of a potential second wave. This also applies to sole traders and freelancers who haven’t been paid on time.
Businesses can take advantage of government support, find ways to adapt their products and services, take out insurance policies, focus on marketing and developing an online presence, and use budgeting tools to help manage cash flow.
Business owners should also look for advice from experts and other business owners who have weathered the storm successfully and used their resources to create a thriving business.
Ultimately, small businesses must remain flexible and agile in order to survive a second wave of disruption, while still providing value to customers. By taking advantage of government support, adapting products and services.