Research from the Bank of Cyprus UK reveals the extent to which British business owners are worried about their cash flow - even in the face of decent sales figures, and to a greater degree than they are concerned about the wider economy.
The findings fly in the face of recent headlines in the mainstream media, where you might be forgiven for thinking the state of the nation's finances as a whole is the biggest obstacle facing small to medium-sized businesses.
In fact, the Bank of Cyprus UK's Owner Managed Business Barometer for July found that general economic factors scored -0.71 on an index-based optimism scale - but optimism about firms' own cash flow and finances scored an even worse -0.81.
Contradictorily, the same respondents were actually positive on issues relating to sales and revenue, which scored +0.25 on the same scale.
To us, that seems to add up to the following: companies are less concerned about the economy as a whole, positive about their sales figures, yet worried about their income stream - which hints at continued difficulty in getting paid for goods and services provided.
Unwilling and unable to borrow
As has been the case throughout the economic turbulence, the survey found that British business owners are unwilling to borrow funds for investment - and those who would be prepared to take on such debt are finding it impossible to gain approval anyway.
Overall, fewer than one in four (24%) of the surveyed businesses said they would be confident of having a loan application approved by their bank, while 41% disagreed with that statement.
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A substantial 81% of those surveyed said they do not intend to borrow in the next three months, with 74% having no intention to do so within the next year.
"The research shows that owner-managed businesses are still reluctant to take on further debt," the report notes. "This may reflect the low level of confidence that banks will agree to such requests, or may simply indicate continuing caution as OMBs nurse their businesses back to recovery."
Restoring cash flow confidence
We would always suggest that the best safeguard for a business's finances is effective credit control, to avoid extending a line of credit to a customer who cannot afford to pay it back, and to make sure inward invoices are paid promptly to keep cash flow looking healthy.
This does not have to mean a heavy-handed approach; firm but fair processes, carried out in a timely and professional manner, can be enough to keep your payments from customers on track, and allow you to take action when an amount goes overdue.
If the amount is owed by a client overseas - whether they are in Europe or elsewhere - the case can be referred to an overseas debt recovery agent for collection, allowing them to act within their geographical jurisdiction, and then pass the funds back to you on successful completion.
With the world increasingly becoming a single market (as evidenced by the existence of organisations like Bank of Cyprus UK themselves), and cross-border contracts often more lucrative than those based solely in the UK, being prepared to act internationally is as important to many companies' credit control preparations as their domestic preparedness - and is an area of concern that is likely to continue to grow in the years ahead.
Over 150 Years Of Industry Experience
Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.
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