Cash Flow still the Main Worry for SME

I love cliches. Some are pretty obvious and sensible – “Don’t burn your bidges”. Some make you think who the hell thought of that??? – “hotter than a snakes ass in a wagon rut” (no idea what it means or how someone came up with that). Some are quite frankly a bit harsh – “he’s so ugly he’d have to sneak up on a glass of water to get a drink”. As we all know, the corporate world is full of them, and we’ve all played board room bingo at some point of our lives. My personal favourite was when I was told many years ago to “pack my own parachute”!

Anyway, one cliche which always rings true, and is as important now as it ever will be, is that old favourite, “CASH IS KING”. It seems cash, and cash flow are still major concerns for SMEs. In a recent survey carried out by recruitment company Robert Half UK, 46% of SMEs surveyed find inadequate cash flow to be a serious worry. The survey also showed that it is in the North and Scotland where this worry is most prevailant.

RBS also seem to back up this study, with their own survey showing 55% of SME owners concerned by cash flow. Their study also showed a worrying trend in that 1 in 4 respondents have turned down high volume orders due to concerns around working capital.

This can be linked back again to the Robert Half UK survey which showed that the number one of cause cash flow problems was slow paying customers, at a massive 61%. Going back to our friend the cliche, popular opinion is that it is the larger companies who are the worst payers, and the bigger they are, the longer their payment terms. If you pressume (and we all know what that is!) that it is the larger companies who are best placed to be putting in the large orders SMEs are turning down, then you can see why they might be nervous about going for them. Huge orders will often put strain on cash flow just to get them fulfilled, if you are then waiting prohibitively long periods to get paid, it makes them even less attractive.

Most SMEs don’t have a permanent cash flow problem. They have an issue every now and again, which they need a flexible short term solution to. Traditionally, SMEs turned to bank overdrafts for this, but with changes to lending criteria and structures, this is more difficult. This is where our selective invoice finance facilities can help improve cash flow, take on the bigger orders, with larger (and we hope more robust and secure) debtors, and with good margins. By financing debtors as and when required, we give a flexible solution to those occasions when cash just isn’t there.

If cash flow can be an issue for you, then pick up the phone and speak to us. You never know, we may be able to help make your business “busier than a one legged man at an ass kicking competition”.

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