Businesses suffer from cash flow problems

According to new research, almost 1 in 7 UK small business owners have been left unable to pay employees – which means that 2.2 million people in the UK may not have been paid on time because their employer had cash-flow issues. The research found that 57% of UK small business owners have experienced problems with their cash flow and over a third of those have been left unable to pay debts.

The research also identified that UK small business owners lose £26,000 a year on average by being forced to turn down work, specifically due to issues created by insufficient cash flow.

Cash flow issues can be caused by late payments from clients and customers, a decline in sales or a lack of financial management. Problems with cash flow can ultimately seriously endanger a small business’ capacity to continue operating, resulting in management being unable to pay staff and suppliers.

The Government has committed to the introduction of payment practice reporting, which will require large companies to review and report on how they’re paying their suppliers in their annual accounts.