Survey finds a third of businesses have cash-flow problems

05/03/2009

According to a new survey by Lloyds TSB Commercial Finance, some 29% of small and medium sized enterprises (SMEs) were having cash-flow problems during the last six months of 2008. This represents an 8% increase in the number last year and 70% cite late payment of invoices as the main reason for their shortfall.

Late payments were an issue for 83% of wholesale and distribution firms and for 80% of construction firms and the problem is expected to worsen over the coming year.

The problem of late payments arises in response to tough economic times, as businesses try to hold on to their cash by delaying payments to creditors.

Lloyds’ Commercial Finance managing director, Simon Featherstone, says that factoring can help firms strengthen their cash-flow,
“with economic conditions remaining tough, it’s vital that businesses examine where the threats lie and look at ways and means of strengthening their cash flow going forward.
It’s no surprise that we’re seeing a rise in the number of businesses enquiring about products such as factoring and invoice discounting. These forms of finance enable businesses to release the value held in assets, such as invoices, machinery or stock, to quickly strengthen cash flow.“