SMEs in cashflow crisis

9 December 2013

According to the latest figures from Everline (formally known as Wonga for Business), small businesses are currently experiencing cashflow problems and are very much concerned about the future. The short term lender for businesses revealed more than 250 SMEs surveyed have struggled with cashflow, with some admitting to delaying payments to suppliers and stopping marketing campaigns. 29% of respondents stated the lack of cashflow has threatened their business growth, with 81% struggling with a cash shortage of under £10,000 every month.

It can be difficult for SMEs to access lending in the current economic climate, as Funding for Lending reports have shown. 43% of small companies believe the whole situation is far worse than before the recession, with over half that have applied for loans in the last couple of years turned away at the door.

If you are having problems with cashflow, the best thing to do is to review  your current system in place and read our top ten tips to managing company cashflow problems (which includes a free download of our daily cashflow spreadsheet).

Cashflow can be a common issue with businesses but it is always best to address any issues before the situation gets worse. Remember turnover is Vanity, Profit is Sanity and Cashflow is reality. You can easily be a profitable business with growing turnover yet still run out of cash and become insolvent because you are unable to pay your creditors. In a growing economy this can become increasingly common as companies chase business but then don’t have the adequate financial controls in place.

In these situations short term lending is one way out of the problem but it is worth looking at other forms of financing and refinancing.