Intelligent Fin.tech Issue 33 | Page 67

Cash flow is one of the biggest issues which SMEs face. Without a steady cash flow, it is difficult for SMEs to manage day-to-day operations and invest in growth. In the UK alone, late payments are currently found to be costing small businesses £ 22,000 a year on average. Paul Holland, Managing Director for UK / ANZ Fleet at Corpay, including UK brand, Allstar, explores the issues facing SMEs and cash flow, and what can be done to keep cash flowing.

usinesses in the UK have been battling against the tide

B of cash flow challenges for several years, with inflation and economic uncertainty high on the culprit list for many that were able to survive the harrowing years of the pandemic. Without a steady flow of funds arriving and leaving on time, small- and medium-sized enterprises( SMEs) are faced with disrupted operation, limiting their ability to pay suppliers and employees, invest in growth and manage day-to-day expenses effectively.

The problem became so severe that late payments are currently found to be costing small businesses £ 22,000 a year on average. The government stepped in, announcing the New Fair Payment Code, which includes new measures and a consultation to combat the issue, which leads to 50,000 business closures a year. culprit for causing cash flow issues in Allstar’ s latest insights, how systemic is the problem and what can SMEs do to ensure cash keeps flowing?

What does the data tell us?

Allstar’ s research, which surveyed 500 SME business owners and decisionmakers, completed with Censuswide, found that over half( 54 %) cite cash flow as an issue and up to 70 % say that the burden of cashflow and admin has significantly hampered business growth. Commonly this can mean that businesses have insufficient funds to cover their daily operations and expenses like payroll or utilities, or aren’ t able to invest in opportunities for growth, like hiring new staff or launching new campaigns or projects.

These impacts are largely internal but poor cash flow can fracture relationships with those outside the company that are crucial to success. For example, without a healthy cash flow, payments to suppliers could easily be delayed. Not only can this put a strain on relationships, but it can disrupt the entire supply chain, particularly if they refuse to extend credit terms or withhold good deals or discounts in the future.

Additionally, cash flows are being impacted predominantly by inefficiencies, and just over half say they spend up to six hours a week managing costs and their cash flow. This means that businesses are losing a fifth of their working week, which is a significant loss when they should instead be focusing on growing the business, investing their time into

And, with 41 % of businesses admitting that late payments are the primary

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