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Poor cashflow stunting UK SMEs growth

Written by Josh Russell on Monday, 01 July 2013. Posted in Cash flow, Finance

Lack of knowledge around cashflow management causing slower growth

Poor cashflow stunting UK SMEs growth

You don’t have to look far within our own pages to find advice on cashflow. In part, that’s because effective cashflow management could be one of the single most important elements of your business. And there isn’t a shortage of businesses who agree with us; in yet another cashflow-themed survey, it was today announced by RBS and NatWest that more than half of UK small- to medium-sized enterprises (SMEs) are concerned about cashflow. However, despite this, well over half of the enterprises spoken to do not use any cashflow management tools and scarcely more than two-fifths of the enterprises spoken to had run a cashflow forecast.

It’s unarguable that cashflow management is vital to SMEs and the survey commissioned by the two banks demonstrates just why; among the business spoken to with more than 26 employees, a fifth were unable to afford to pay staff on time. In the same group, 41% revealed that they hadn’t been in a position to scale their business, invest in new technology or increase the size of their premises. Perhaps more worrying is the fact that one in four businesses were forced to reject a high volume order because of worries around cashflow.

Seemingly, this trend is caused by a lack of support, be it financial or knowledge-based. Approximately a quarter of the businesses spoken to felt there was nobody they could turn to for advice. Less surprising is that a whopping 78% of enterprises felt that the government wasn’t doing enough to provide ready access to capital, further proving that encouraging bank lending is the order of the day.

But where can SMEs turn to for advice? Well, not only can you pay a visit to this very site but the banks have released their own tool designed to assist businesses to make the most of your cashflow. The ‘Working Capital Optimiser’ is available for free on both the RBS and NatWest websites – regardless of who an enterprise banks with – and is designed to analyse businesses’ current positions as well as plan for future scenarios.

Aron Thompson, digital director at RBS & NatWest commented:

“Good cashflow management is business critical, so it’s really worrying to see so few SMEs proactively managing working capital. In working closely with our customers we designed the Working Capital Optimiser to provide all businesses with the ability to better understand their current working capital position and see how they may be able to improve it.”

Bearing in mind cashflow is the lifeblood that keeps a business moving, SMEs really can’t afford to turn down free help when it’s offered. Particularly when that help could mean the difference between growth and stagnation. 

About the Author

Josh Russell

Josh Russell

Our former editor, Russell was the man in charge of properly apostrophising our publication and ensuring Oxford commas are mercilessly excised. Our former digital doyen, he’s also a Photoshop pro, a dab hand with InDesign and the man to go to if you need a four-hour soliloquy about the UK's best silicon startups.

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