Small businesses and cashflow

We work with the public sector, and being paid on time is a constant challenge. What would significantly help our business would be regulation requiring all small busine to be paid in 14 days rather than the 60 days we have come to expect.

The one thing affecting us more than anything else is not cashflow, it's talent. We do not have the skills we need in our local area to grow our business. We have had to open offices overseas to recruit talent there. This has meant a loss of jobs and employment taxes to the UK economy. The one thing the Government could do is to survey businesses to see what skills we are missing now, what we think we will need in five to ten years' time and then fund colleges and universities for these skills.

Governments should prevent big corporates from bullying and throwing their weight around when it comes to late payments to small businesses. Create a system for small businesses where, providing certain criteria are hit, if big corporates decide not to pay on time, the Government will pay the invoice to the small business and collect the debt along with a fine. A £5000 invoice may be a drop in the ocean to the big boys, but it could be the difference between keeping the lights on for us start-ups. I manage my cashflow through open and honest communication, ruthlessly yet professionally chasing bad debt and making those hard decisions, such as cutting back on business luxuries well before it's too late. Make the tough decisions early.

Keeping the cash flowing is the lifeblood of a small business to avoid having to eat into working capital. Staying in touch with changes in the payment habits of clients is the first marker that there could be trouble ahead. Although the Prompt Payment Code mandates payment within 30 days to small businesses, very few organisations have actually signed up and 30 days is not often the norm. So if your 'norm' is six weeks, and it starts to creep towards seven or eight weeks, then sit up and pay attention. Finance teams in bigger businesses don't usually feel as emotionally attached to your late invoice as much as you do, so a plain-speaking conversation is the best first step to take to recover what's due to you, and it works nine times out of ten. Failing that, pointing out that you will exercise your right to raise an additional invoice in respect of interest and compensation on the money owed, as per the Government guidance, usually invokes a positive response in even the most resolutely silent accounts personnel. Giving them a link to the Small Business Commissioner interest calculator lends the necessary weight too we find: https://www.smallbusinesscommissioner.gov.uk/deal-with-an-unpaid-invoice/how-to-chase-an-unpaid-invoice/interest-calculator/

The one thing that would make a big difference is a repeat of the Small Business Rate Relief grants we had in 2020/21. Why? Because ever since lockdown was "lifted" and all restrictions gone, we have had fewer clients through the door as they have been frightened to go out. We are not the only business in this position. It's all well and good saying we just need to get used to going out again, but until people are "used to going out again", we just won't get the income we need and more small/micro businesses will close.

Cashflow management is vital to the success of any business, especially in today's environment. You can have a profitable business that is 'cash negative' i.e. it requires cash to grow. Poor cash management is most probably the number one reason businesses fail. In my opinion, there are two key actions business owners can take: 1. Awareness and education around cashflow management and the difference between profit and cash and why growing and doing more business may not be the answer to your cashflow problem. In fact, it may be better to have fewer customers at higher prices and shorter payment days than more customers at a lower price and longer payment terms. 2. More flexible cashflow finance facilities for growing companies. There is a real barrier for companies with insufficient trading history, historic profits or personal assets to securitise against. I believe the Government could assist by subsidising and collaborating with professional educators and offering free cashflow management training to company owners. Every business owner should understand for every pound of revenue, how much cash, or working capital, is required. In addition, I believe the Government could provide incentives to money lenders and share in some of the risks to help provide cashflow funding solutions, especially to those businesses with a sound plan, for example, providing cashflow finance for an upcoming project based on that project's projections and assumptions, rather than historic data.

Many business owners are focusing on the numbers that just keep their business afloat, and that's keeping them down. Whether we are in an economic crisis or not, every business needs to focus on the numbers that make them thrive as a business, not just survive. Yes, it's tough. But yes, you can control what your outcomes look like. Learning how to do marketing that generates leads and sales is imperative right now. Without this know-how, it's like wearing an invisibility cloak.

It's about spreading the risk. I always get signed contracts and then take a deposit. That way, if the balance payment is delayed or never comes, it's less of a hit to take. I have suffered from losses and been to court too, it's not nice and the system isn't always fair. If the Government didn't let people simply accept a county court judgment and walk away without paying what they owe, perhaps there would be a bigger deterrent to exploiting small businesses. The one thing that would make a huge difference to our business right now would be to sell packaged services online; an e-commerce arm. And that's something we are working on.

With local funding for businesses being cut, it doesn't leave small businesses with any support to thrive or survive. Our local Growth Hub has had its funding removed, which means there's no money to support SMEs in the area anymore. The local enterprise partnership has been shut down... what is even left for us anymore?

We are a property developer and main contracting business in the construction industry, cashflow issues impact us and our supply chain heavily as there are very few ways of managing the shortfall in cash without depriving another business of their payment. It is difficult to take any steps that prevent cashflow issues as the problems were not foreseeable and our cash reserves are depleted following Brexit and Covid. Our only hedge is to build for solid, well-funded clients such as housing associations with decent payment terms negotiated. Maintaining relationships and communication is key in such a difficult market. I would ask the Government to give short-term tax relief to small businesses and bring back economic stimulus measures such as SDLT reductions, the help-to-buy scheme and please, please no more rash and ill-thought-out shocks to the system.

What steps? Examining every area of potential cost saving (including headcount) The one thing that would make a difference is our energy cost. We can't control it and we can't pass on the additional material, labour and trading costs. Energy is taking everything spare out of our business. The Government could cap the supply price of energy (not fund the primary energy suppliers) - the difference in business running costs and consumer spending would be instantaneous.

It's obvious that people have no confidence in the Governments 'plan'. Sales have dropped for us by 50% compared with this time last year and it's really worrying. Even our most loyal and regular customers aren't spending and say that they're too worried about future energy bills etc. It no longer matters what Rishi Sunak and friends promise because nobody believes them. At this point, I have no idea what would reassure people other than a general election and a fresh start.

The biggest impact for us as a small business is big businesses taking so long to pay invoices which negatively impacts our cashflow and slows our payment to other small businesses. I'm sure many (if not all) of the larger businesses could afford to pay quickly but seem happy with 45 day+ terms, despite repeated requests to reduce this to within 30 days. Personally, I'd love to pay my suppliers within seven days, but the larger orders from our larger clients take up so much cashflow it becomes a domino effect throughout the chain. Likewise I'm sure the might of the Government could assist us little guys with VAT reductions and tax breaks but they seem content to make it a battle to the end with relentless increases, fines and layers of red tape that make accessing any kind of grants or assistance a near impossibility. In fact just recently we were approached to 'sponsor' an ad in a council business magazine which boiled my blood ... surely it's the councils responsibility to help promote local business and not simply try to squeeze more cash from us! We continue to offer new gifts and services along with investing every single spare penny back into the business to enable Colleague Box to stay relevant and interesting for our customers ... if we are to go down it wouldn't be without a hell of a fight.

I've had quite a few non-payments on completion of bespoke pieces, which is frustrating, despite being understandable. I may have to start requesting 50% deposit up front in future. I think it would be less frustrating if people actually spoke to me instead of just going silent. And I think communication is key for anyone feeling the pinch. Don't bury your head - talk to the people you owe money to, something can usually be worked out. As for me, I'm cutting back on materials even more and reducing my output even further. I keep meaning to just give up, but then I say "just one more month, one more week". Not sure how long I can keep kidding myself though. I want to just get my head down and keep moving forward, but as a one-person outfit, that's even harder in the current climate.

We are an organic skincare company and have international clients. The four (yes four) increases to postal rates in the past two years have all but killed our international sales and I have lost at least 60% of my international business due to the unbelievable cost of shipping.

Cashflow is the lifeblood of any company. We have someone whose responsibility it is to be proactive about aged debt and have set strict protocols to follow when chasing, including escalating the tone and format of contact as the debt gets older. Right up to the point of pausing existing services and threatening legal action, which often can spark a response. My biggest quick tip is to implement automated chaser emails within your billing system and try and get clients to sign up to direct debit, which reduces any friction from the debt recovery process.

Cashflow has been a juggling act for the last few months, with the cost of everything from manufacturing to packaging increasing constantly. As a small retail business, everything hinges on having a good last quarter and harnessing the spending power of Christmas shopping. I'm taking part in Colour Friday at the end of this week, which is an initiative created by Holly Tucker as the small business alternative to Black Friday. This event aims to reallocate some of the massive Black Friday spending potential into the pockets of small businesses rather than big corporate retailers. So many independent companies are teetering on the brink of survival at the moment so spreading the message to shop small has never been more important.

Like many things in life, small businesses are finding that credit is never there when they need it. When the economy is doing well, a business will be bombarded with cheap credit offers but as soon as the markets turn, the credit taps dry up faster than a spring in the Sahara. Those businesses that have been around for a while will know this and have cash reserves set aside. Unfortunately, many newer businesses that had healthy cashflows and previous access to cheap credit, are the ones most likely to suffer. History shows that this can ruin a healthy business faster than any other factor. Unfortunately though, the Government has a poor track record when it comes to providing loans to businesses. Anyone remember the shambles of the Covid loan scheme? Instead, they could provide greater tax incentives to banks and building societies, to lend money to smaller businesses. They could also look to increase the Enterprise Investment Scheme minimum investments and even widen the scope to sectors not covered by the scheme. Whilst Enterprise Investment Schemes (EISs) and Venture Capital Trusts (VCTs) cost the Chancellor in terms of immediate tax, they ultimately contribute to economic growth and employment.

Businesses are facing the perfect storm when it comes to cashflow. Customers are paying slower. Suppliers are tightening up on credit limits and payment terms. Supply chain disruption means that businesses are sinking more cash into stock. Prices are rising. This is on the backdrop of Covid loan repayments kicking in and deferred payments to HMRC needing to be repaid. Sadly, these issues are compounded further. The rising base rates mean that the cost of funding is increasing. The perceived risk in the market means that asset valuations are dropping and the loan-to-value that lenders are willing to provide is falling. Lenders are looking for increased security, higher pricing and lower exposure against the assets that businesses put forward as security.

We need local authorities to pay within 30 days as, currently, it takes us six to nine months to recoup our initial investments before we start seeing a cash surplus. Many of our landlords prefer the security of local authority payments, but none of them would accept two to three months in arrears. Most of the delays are due to 'admin' issues, but I'm sure in the world of tech, there's a much quicker way they can automate their 'admin' and bureaucracy.

As the saying goes, turnover is vanity, profit is sanity but cash is king. Managing cash flow is of vital importance for small businesses, now more than ever. It doesn't matter how high your sales are, if you don't have cash available to pay bills and suppliers then your business is in danger. We tried to tell our small business client two important things. Firstly plan ahead and apply for finance before you need at, as you are more likely to accepted than when you are desperate. Secondly explore your full range of finance options, short term finance may not be the best option if your business is growing fast. Longer term options like invoice finance may be more suitable.

Cashflow is not the major issue for us as most of our trade customers are independents who pay on delivery or within a month. What we need is more cash in people’s pockets, which would help to return the hospitality industry to good health. The cost of living crisis needs to be addressed, and the answer is not just to put the living wage up, as that means businesses have to raise prices to compensate, so it effectively cancels out any benefit. What we need are for overheads like energy, taxes, duty and rent to come down. Everything’s changing so quickly we have to stay nimble and respond to circumstances. We’re spending our time strategizing based on worst case scenarios now instead of best case, as it seems that’s what we can expect. It’s not the kind of future-planning we want to be doing. The Government need to re-prioritise and shift focus from big business to small. There are over 5.5 million SMEs in this country, they need to recognise that is where a huge amount of innovation, employment and taxes originate, plus they create community and form the backbone of the local economy.