A third of leaders at the UK’s small and medium-sized businesses do not fully understand what cash flow is, a new survey has suggested, despite more than 80 per cent saying they had experienced financial pressures related to cash flow.
The survey from Novuna Business Cash Flow polled 1,000 SME decision makers and suggested that 82 per cent had encountered cash flow problems. The most common causes were late customer payments (36 per cent), seasonal shifts in sales (35 per cent) and unexpected changes in trading conditions (27 per cent).
According to Novuna, the cautious economic outlook from the Autumn Budget has increased the pressure of the already challenging environment that many small businesses are operating in. The firm said that the gap between knowledge and day-to-day experience among SME leaders highlighted the scale of the challenges small businesses face.
The survey showed that cash flow issues are structural, rather than occasional, and that they occur on average 7.4 times a year at affected companies. Small and medium-sized businesses were most likely to report cash flow problems (91 per cent and 90 per cent, respectively), followed by micro businesses (84 per cent) and sole traders (68 per cent).
Despite the frequency of cash flow challenges, 55 per cent say they still rely on short-term fixes such as cutting costs, taking out loads or borrowing from friends and family. By contrast, few SMEs turn to longer-term solutions such as invoice finance (11 per cent).
33 per cent of SME leaders said that they felt confident in dealing with issues when they arise and 28 per cent said that cash flow challenges had encouraged them to strengthen their financial planning. However, 24 per cent said they felt stressed or anxious about meeting their financial obligations and 19 per cent worried for the future of their business as a result of cash flow issues.
John Atkinson, Head of Commercial and Strategy at Novuna Business Cash Flow, said: “These figures show that cash flow problems are not occasional – they're part of the everyday reality for most SMEs. When challenges come up repeatedly across the year, it not only puts pressure on finances but also limits a business's ability to plan ahead and grow with confidence.”
“While many SMEs show resilience, we cannot ignore the emotional toll that cash flow disruption brings. Stress, frustration and uncertainty can build quickly when late payments or unexpected costs hit. That's why timely support, alongside funding solutions, is so important.”
