Cash flow has become a serious concern for many UK-based businesses, with the largest demographic hit due to choked cash flow streams of those classed as small companies. At the moment, an average of 9 in 10 small businesses have experienced at least one month of negative cash flow every year, while 1 in 4 businesses will struggle for 6 months or more throughout the year.
This continues with a rising trend around the world. The average number of negative cash flow months in Australia is currently 4.2, in New Zealand, it's 4.0, and in the UK, it is currently 4.5. This cash flow issue was helped due to government funding and financing throughout the pandemic, but now that support has been stopped, the issues are back full-force.
Challenge of Cash Flow
While negative revenue is a common cause of cash flow issues, it's not the only reason why businesses are struggling. Any delay in invoices being paid - even normal issues, like waiting for processing and transfer - can inhibit a company's ability to make payments, jump on opportunities, and manage its finances. This can be extremely frustrating for businesses that, by all rights, should be doing well. The good news is that there are a few ways businesses of all sizes can free up their cash and establish a positive cash flow.
There are many reasons why an invoice may not be paid immediately. It's quite common when working for large companies. The invoice needs to be sent to the financial teams who will then need to log it, approve it, and then send the money back to you. This could mean waiting upwards of a month to get paid for work you have completed. If you require the money from those invoices to be paid ASAP, then it is a good idea to look into invoice financing. You can see all offers available to you by visiting a specialised broker, like fundinvoice.co.uk. Getting this financing can be a one-time thing, or a go-to approach to help you free up money you already have, but just don't yet have access to.
Every second that you delay in processing payments or sending out invoices is a further second wasted. While invoice financing can help you when there's a delay in payments, it's best used when the issue is entirely on your customer or client's side. If the reason payments are delayed is that you take time to send out invoices, it's not the best solution. To avoid unnecessary waiting on your side, set up automation tools that make it easy to generate invoices, keep track of what has been paid and what has not, and even chase up payments outright. Automation is possible for businesses of all sizes, and it can help you improve your cash flow, establish a strong relationship with your employees and partners since you make timely payments, and can also help improve your business' efficiency outright.