70% of SMEs try to manage Cash flow themselves

SME-Cash-Flow-ManagementCash flow is the money a business has in the tank to function, can make or break businesses. Business Insights explored the attitudes of UK SME owners on managing cash flow.

What is cash flow? Put simply, it is the money your business has readily available to use for day-to-day operations. Put less simply, it is whether your current assets are enough to cover current liabilities. It is also referred to as operating liquidity, working capital and current ratio.

According to a recent study by MarketInvoice, over half (52%) of business owners said they relied on making ad-hoc paper notes, using spreadsheets or relying on text messages from their bank to understand their cash position. Meanwhile, 18% reported using online accounting software to do so.

Overall, 70% are taking it upon themselves to manage this. Only 30% were using an accountant to manage cash flow information.

Cash flow is clearly something front-of-mind for SME business owners, with almost half (45%) checking their position on a daily or weekly basis to ensure they have the means to continue the smooth running of their business.

Every business needs to know their cash position but the disproportionate focus on this can distract entrepreneurs from focusing on their business and driving growth. Managing cash needn’t be such a taxing affair with the plethora of financial expertise available to business owners in this day and age.

Cash flow constraints mean that 87% of businesses are prevented from taking on more orders. Yet, two-thirds (67%) of business owners aren’t seeking any advice. Of the businesses that ask for help, the majority (14%) are turning to their business bank manager. Furthermore, in shoring up cash, almost half (48%) of business owners reported increasing their bank overdraft facilities and one in six (16%) used invoice finance to tackle this particular constraint.

It’s imperative that business owners seek support from a finance professional to help manage their cash flow. UK economic growth cannot be stunted because of cash constraints. Businesses waiting on long payment terms can use invoice finance to help bridge the gap by getting an advance on their invoices and propel their businesses forward.

We designed the EFM Cashflow Healthcheck tool so you can easily get an indication of the financial health of your business. This review will alert you to situations that need to be addressed, so you have a better idea of where your money is, where it’s going and what you need to do, to stay in control.

Are you looking for support with your company’s cashflow management? Our nationwide team of qualified & experienced EFM Experts can help. Get in touch today for your free one to one consultation. Call 01582 516300 or email clientcare@efm.uk.com