SMEs suffering from lack of cashflow

A LACK of cash flow management is stopping small- and medium-sized enterprises (SMEs) from scaling up, American Express claims.

A poll of SMEs by the credit card provider found 46 per cent of senior decision makers feel cash flow struggles are distracting them from growth-related activities like product development and marketing.

One in five said keeping on top of financial commitments is taking their focus off chasing down new business opportunities, according to the poll.

The research showed many small firms are relying on short-term fixes to maintain cashflow, with 26 per cent using an overdraft, and 12 per cent looking to business loans.

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A quarter of respondents said that problems with cashflow had kept them awake at night and a similar number (24 per cent) said it had caused them stress.

Despite this, only half of small business leaders said they use an accountant or financial adviser to help them take back control of cashflow.

“Getting on top of cashflow doesn’t need to be as challenging as many SMEs might expect and doing so will free up their time to focus on growing their business as well as alleviating personal stress,” said Carlos Carriedo, senior vice president of global commercial services at American Express.

“Breaking the cycle of late payments should remain a priority for SMEs to avoid problems being passed down the supply chain.

“They should definitely explore the full range of financial support and tools at their disposal to crack the cash flow conundrum.”

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