Why Do 70% of SMEs Try to Manage Cash Flow Themselves?

Most business owners taking a ‘back-of-the-envelope’ approach to cash flow, using ad hoc paper notes or spreadsheets to manage money coming in and out. Business owners monitor cash flow every day, but two-thirds don’t seek advice on managing it. Only 30% of business owners use an accountant to manage cash flow information.

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

What is cash flow?

Put simply, cash flow 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. Cash flow is also sometimes referred to as operating liquidity, working capital and current ratio.

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 flow 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 SMEs with almost half (45%) of business owners checking their cash flow position on a daily or weekly basis to ensure they have the means to continue the smooth running of their business.

Anil Stocker, CEO at MarketInvoice, commented: “Every business needs to know their cash flow position but the disproportionate manual focus on this can distract entrepreneurs from focussing on their business and driving growth. Managing cash flow needn’t be such a taxing affair with the plethora of online tools available today.”

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 about cash flow. Of the businesses that ask for help, the majority (14%) are turning to their business bank manager. Furthermore, in shoring up cash flow, almost half (48%) of business owners reported increasing their bank overdraft facilities and one in six (16%) used invoice finance to tackle cash flow constraints.

Anil Stocker added: “It’s imperative that business owners get advice to manage their cash flow. We can’t allow UK economic growth to be stunted because of cash flow 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.”

1 Comment
  1. Glenn D Blackman says

    Interesting that only 70% are checking their cash flow themselves. I would think that would be a basic competence of running a business. its also interesting that so many are checking daily/weekly (indicating cash may be tight) and that such a large percentage are being prevented from taking orders due to cash flow issues. There is a huge potential supply from the invoice finance sector – but often this avenue is often not well understood by businesses.

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