Cashflow is firms’ biggest worry but new finance solutions offer hope for growth
Cash flow looks set to cause some restless nights this Christmas as latest findings from Barclaycard suggest this is now the main worry for independent and smaller firms.
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While almost 70 per cent cite this as the key concern, over half of them say it’s one that is increasing and more acute than 18 months ago.
The main causes are economic uncertainties, falling sales and the impact of Brexit.
Almost the same proportion don’t expect any change over the next 18 months and fear the value of sterling may drop making the situation worse.
Top of SMEs’ wish lists to reduce their working capital woes are the means to guarantee a payments date, protect accounts receivable regardless of external factors like a customer going bust and having more ways to pay suppliers.
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We have more than £1,000 in new orders and solved a seasonal problem thanks to that cash flow support
Searches for solutions are increasing as firms see their worries hampering expansion.
But “from a corporate credit card to a loan, the situation is preventable and should not hold firms back from seizing new sales opportunities or investing in new business technology to help productivity,” says managing director of Barclaycard Commercial Payments Marc Pettican.
Top takeaway Bombay Burrito in north London, which serves Indian curries in wraps, found a solution after it sought to balance seasonal fluctuations with year round costs.
“After paying for priorities like staff wages, rent and keeping the lights on, it can be difficult to take the actions we need to grow our business – for example, developing new dishes, hiring additional staff or redecorating our restaurant,” explains owner Maria Savage.
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Last July she decided to launch and market a new salads menu.
“But I had a rent bill to pay and VAT too which made investment difficult,” she says.
The answer was to transfer £3,000 of available credit on the firm’s Barclaycard business card to its Barclays account through the card provider’s Transfer to Bank facility.
That paid for market research, buying extra stock, testing recipes and distributing leaflets so nearby offices knew about the new offering.
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The moved has generated nearly a 30 per cent year-on-year increase in sales between July and September.
“We have more than £1,000 in new orders and solved a seasonal problem thanks to that cash flow support,” adds Savage who repaid the £3,000 last autumn within the interest-free time window.
