Cash flow management is a major cause of stress for SMEs.
So concluded new research from American Express which showed that cash flow is getting the better of the UK’s small businesses and holding them back from reaching their potential.
Almost half of senior decision makers admitting these challenges are distracting them from growth related activities like product development and marketing.
What’s more, one in five say keeping on top of financial commitments is taking their focus off
chasing down new business opportunities.
The research showed that not having a proper system in place to manage money flowing in and out of their business is leading SMEs to rely on short-term financial fixes.
A quarter SMEs use 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.
Carlos Carriedo, Senior Vice President, Global Commercial Services at American Express said: “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”.