Improved cash flow could be the cornerstone of SME and sole trader success in the UK according to new research carried out by mobile card payment app, SmartTrade App. Delayed invoices or non-payment is a hinderance to SMEs and sole traders throughout the UK with four in ten applying for loans or other finance, citing cash flow as the reason for applying.
Half (53 per cent) of sole-traders have faced cash flow problems in the last 3 months and more than two thirds (67 per cent) cite the Christmas period as the worst for experiencing delayed invoices.
The start of the new year is also a particular time for concern for those struggling with cash flow. The January Tax Assessment is due at the end of the month, and many sole traders simply don’t have enough cash in reserve to pay large amounts in a lump sum. This can result in fines being added and additional funds needing to be secured.
A quarter (25 per cent) of all businesses and sole traders state that it would be February at least before their cash flow and delayed invoices began to return to normal.
Poor cash flow is not a problem reserved just for new businesses, as many as 35 per cent of businesses between 3-5 years old say that they still struggle. Over half of those asked in a recent survey (61 per cent) agree that if customers could pay on completion their cash flow would be less problematical.
Certain industries seem to suffer more than others, with the construction industry being the hardest hit, with the worst record for late payments.
Not being able to accept immediate payment causes significant problems for small businesses and sole-traders who need to take payment in order to ensure their cash flow does not run into deficit figures.
Two thirds (63 per cent) of small businesses surveyed say they still do not accept card payments. In support of this, those businesses that were able to obtain some form of electronic payment device saw as many as 43 per cent of traders indicating improved cash flow as a direct result of using electronic card payment methods.
SmartTrade App’s co-founder and chief executive Keld van Schreven comments, ‘Christmas can be a difficult time for many small businesses who are not in retail. As our survey showed many experience cashflow problems and the ability to accept quick payment would be a bonus for many small businesses or traders, but the additional cost of a traditional card payment machine can be prohibitive.
‘Sole traders and SMEs will need to reevaluate their payments strategy if they are yet to accept card payments. With cash transactions expected to fall by as much as 30 per cent in the next ten years it’s more important than ever to let customers pay with plastic.’
Further reading on delayed invoices
