Half of UK SMEs struggle with cash flow, with 10% considering closure

Some 46% said their cash flow issues were primarily driven by an increase in costs, while over one-third (37%) pointed to late payments from their clients and customers, with this impacting smaller businesses more than their larger counterparts.

Other factors affecting cash flow included slow sales (27%), and unexpected expenses (26%), as well as volatility or seasonality in sales (25%).

Complex supply chains were also causing issues for just under one-quarter of businesses (23%).

Shawbrook’s data revealed that issues with cash flow had been a source of stress to businesses, with 38% of decision makers saying it was impacting them and their senior management teams.

Around one-in-five said it had worsened their own mental health and nearly one-third were concerned about the impact it had on staff morale.

Growth plans were also being threatened by hampered cash flow, with 30% of businesses saying they had to delay plans, and a further 27% had struggled to access funding.

The research showed that 28% of senior figures had picked up business expenses with their own funds.

In order to alleviate these issues, respondents had considered a business loan to make up costs (32%), while others considered alternative finance products.

Neil Rudge, chief banking officer in commercial at Shawbrook, commented: “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, but British businesses should remain resolute and seek support where they can.

“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.”