Survey highlights SME cashflow crisis

A SURVEY by Liverpool-based debt collector Daniels Silverman has highlighted increased concern among small and medium-sized enterprises (SMEs) about poor cashflow, with two thirds stating it was putting their businesses in danger of closure.

Daniels Silverman canvassed 180 SMEs across a range of sectors and found that 65% felt poor cashflow was threatening their chances of survival. More than 70% had seen cashflow deteriorate in 2011 and over 80% were concerned that cashflow will worsen in 2012.

It said that a third had been forced to scale down their businesses or make redundancies due to poor cashflow. Over 90% were not aware of the EU Late Payment Directive due to be implemented next year and only 8% of those that were aware felt it would make a difference.

Carole Hughes, managing director of Daniels Silverman, said: “Many SMEs are struggling with difficult trading conditions and increased overheads.

“The outlook is increasingly gloomy with most SMEs predicting worse to come. SMEs have little confidence in existing payment legislation and are not even aware of the forthcoming EU Late Payment Directive.”

“As financial conditions worsen maintaining a positive cashflow will become more challenging and we are encouraging SMEs to prioritise payment.

“Businesses must undertake more regular credit checks, put in place processes that highlight when a creditor is in financial trouble and, most importantly, act quickly when payments are overdue.”