10th July 2018

Getting a grip on cash flow is the key to SME success says AMEX research

New research from American Express reveals cash flow is getting the better of the UK’s small businesses and holding them back from reaching their potential, with almost half (46%) of senior decision makers admitting these challenges are distracting them from growth related activities like product development and marketing. Furthermore, one in five (18%) say keeping on top of financial commitments is taking their focus off chasing down new business opportunities.

The research shows that not having a proper system in place to manage money flowing in and out of their business is leading small and medium enterprises(SMEs) to rely on short-term financial fixes. A quarter(26%) of SMEs are using a bank overdraft to help them manage their cash flow, while 12% are looking to business loans in order to meet financial commitments, which may not always be the most financially suitable tools at their disposal.

Challenges with fulfilling financial obligations can have an impact on supply chain relationships as well. A third(30%) of SMEs who have missed a payment deadline have had a supplier withhold goods or services and over a quarter(28%) have had their relationship with a supplier they depend on tested. Missing payments can also cause costs to add up for SMEs, with 35% having to pay a fee for doing so.

Despite money matters causing unnecessary worry for small business leaders, with these concerns keeping a quarter (25%) awake at night and a similar(24%) number experiencing symptoms of stress, only half(54%) use an accountant or financial advisor to help them take back control of cash flow.

Carlos Carriedo, Senior Vice President, Global Commercial Services at American Express, comments “Getting on top of cash flow doesn’t need to be as challenging as many SMEs might expect and doing so will free up their time to focus on growing their business as well as alleviating personal stress.
Breaking the cycle of late payments should remain a priority for SMEs to avoid problems being passed down the supply chain. They should definitely explore the full range of financial support and tools at their disposal to crack the cash flow conundrum.”