Cash flow concerns are keeping business owners awake at night

Nearly half of business owners in the UK believe that poor cash flow is stopping their business from reaching its full potential, according to a new study.

American Express, which published the research, said keeping on top of cash flow is an important aspect of growing a business as well as alleviating personal stress.

The bank polled more than 500 senior decision makers within UK small and medium-sized businesses. It found that 56 per cent feel that the challenges associated with poor cash flow prevent them from making growth-making decisions, such as marketing their business.

A further 25 per cent said poor cash flow keeps them awake at night, while 24 per cent of SME owners feel stress in their personal lives for the same reason.

When asked about their experiences with late payments, a third (33 per cent) say they have had goods and services withheld after missing a payment deadline. Likewise, 28 per cent have developed an acrimonious relationship with suppliers because of cash flow concerns, and a further 35 per cent have had to pay late payment fees for missing a deadline.

The study suggests that SMEs are often forced to spend more in the long run, too, as 26 per cent regularly run down bank overdrafts and 12 per cent use short-term business loans to cover their own shortfall in cash, it reveals.

Carlos Carriedo, senior vice president of global commercial services at American Express, suggests that small business owners should seek help from accountants or financial advisors

“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,” he said.