Four in 10 (38%) small and medium-sized businesses (SMEs) have suffered cashflow problems over the past two years, according to new research by Amicus Commercial Finance.

The figure rises to two-thirds (65%) among medium-sized firms with between 50 and 250 staff.

According to the study conducted among 500 small businesses owners, over the past two years one in seven (15%) are still suffering liquidity problems and 12% either came close to or became insolvent. 

Small businesses in particular recognise the threat cashflow problems can pose; nearly three-quarters (71%) say it is the biggest risk they face.

The biggest challenge caused by cashflow shortages is paying suppliers, cited by 41% of business owners.  This is followed by meeting debt repayments (30%), buying inventory (29%) and paying staff (24%).  One in five (18%) said they had lost contracts due to cashflow problems.

John Wilde, managing director of Amicus Commercial Finance, said: “Our research shows that most small firms recognise the damage caused by cashflow problems but that doesn’t guarantee their immunity. The worst case scenario is insolvency but, in our experience, slow paying invoices are often to blame. As working capital and cashflow are by their very nature dynamic, most traditional systems have failed to keep pace over the last few years.”

How does cashflow affect your business? What methods do you use to combat this? Tell us your views by emailing hvpmag@mail.hgluk.net.