Cash flow is still a major challenge for many UK businesses, according to new research from Santander Corporate & Commercial.
Almost one in six respondents (17%) in a UK-wide study said they were “very” concerned about managing cash flow effectively over the next 12 months, with a further 27% saying they were “quite” concerned.
Around half (46%) of businesses reported being hit by at least one recent cash flow setback – with late or failed payments from customers (24%), weak sales (8%) and unexpected costs and charges (7%) the top three reasons cited.
Larger UK businesses (those with annual revenues of between £5m and £20m) were less concerned about cash flow than smaller companies. Just 6% said they were “very” concerned, compared with 14% of firms with annual revenues of between £500,000 and £1m, and 22% in the £250,000–£500,000 bracket.
The research also revealed greater use of cash flow management solutions such as invoice finance, asset finance and supply chain finance by larger businesses. One in four firms (25%) with turnovers of between £5m and £20m have used invoice finance or intend to over the next 12 months, compared with 12% with revenues of £500,000–£1m and 2% in the £250,000–£500,000 tier.
Marcelino Castrillo, head of SME banking at Santander Corporate & Commercial, said: “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.”
Sally Percy is editor of The Treasurer