Half of small businesses experiencing cashflow problems
According to research by independent invoice finance provider, Bibby Financial Services (BFS), half of the UKs smallest enterprises are experiencing cashflow issues.
Findings released as part of a new report, Livelihood Businesses in the UK, shows that 50% of businesses with nine or less employees have suffered with problems such as customer insolvency, bad debt and reduced supplier payment terms over the past 12 months.
BFS is now calling for small businesses to review their sources of funding and to consider how they can enhance relationships with suppliers to improve their working capital position.
David Postings, UK chief executive at BFS said: “Microbusinesses account for 95% of all private sector businesses in the UK and they are vital to the economy in terms of output, employment and – of course – the value they add to supply chains.
“Already this year, we have seen signs of economic recovery but it’s imperative that small businesses review their sources of finance so that they have working capital to help fulfil orders and continue to pay staff”, Postings added.
Findings are based on a survey of 500 micro-enterprises with up to nine employees undertaken in Q4 2013.
David added: “It’s now time for business owners to look at how they can use external finance to improve their cashflow positions, enhance credit control management and how they can leverage relationships with suppliers to improve their own working capital positions.”
Bad debt, declining margins and restrictive supplier payment terms were the top three issues faced by small businesses.
In September 2013, Bibby Financial Services launched Forward Finance – a finance solution aimed at businesses turning over up to £300k. Postings said the product’s transparent charging structure and flexibility are what sets it apart from other finance solutions:
“Often, small businesses just need a kick-start when it comes to finance and it’s for this reason that Forward Finance has been so well received. It enables businesses to access an injection of working capital without having to be tied into long term contracts and it’s this flexibility that businesses of this size require.”
Richard Sorsby of First Choice Healthcare Limited uses Forward Finance and said: “It can take anything from one to three months to receive payment and we needed working capital straight away to pay staff and keep trading, which is why we selected Forward Finance.”
“I had worked with Bibby Financial Services when I helped set-up other businesses, so I knew they provided a reliable service. I knew from the beginning how much I would be paying and they are great at keeping in contact.”
