Small businesses facing difficulties with cash flow

Cash flow has become a major issue for small businesses in the UK, potentially pushing up the number of businesses facing administration.

According to a recent report from Santander Corporate & Commercial, nearly half of British SMEs are worried about managing their cash flow over the next 12 months.

The research, which looked at 451 companies with a turnover of over £50,000, also discovered that 46 per cent of businesses said they had recently suffered at least one disruption to their cash flow. Customers being late in their bill payment was the primary cause of this.

Marcelino Castrillo, head of SME at the bank's Corporate & Commercial division, commented: "Cash flow clearly remains a huge challenge for thousands of UK businesses."

Since the recession hit, the Government has been looking at ways to boost access to funding for small businesses. It has extended its flagship Funding for lending Scheme to this end, but it appears that more needs to be done, particularly when it comes to keeping cash flowing.

Castrillo added that more SMEs should consider looking into alternative financing to help handle cash flow problems, an option that is becoming increasingly popular.