Cash flow problems are putting the brake on small business growth in the UK. The impact of late payment and the financial burden of policy and non-policy costs are proving major barriers to essential development. Alternative finance can help.

A new study from MarketInvoice shows that almost 90% of small businesses in the UK cannot take new orders because of cash flow problems. This extraordinary statistic is a startling reminder of the challenge that business owners face in ensuring that there is enough money coming in to cover outgoings.

Research by Opus earlier this year demonstrated the impact that cash flow concerns and financial problems in general are having on small businesses and the health of owners.

One of the main causes of cash flow problems is late payment. Despite significant action to combat the practice, including legislation and the naming and shaming of serial offenders, it remains a thorn in the side of small businesses. And the consequences go beyond merely restricting the potential for growth, with a notable number of small firms going under every year as a result of the practice.

Another major reason for cash flow problems is the level of demand on small business finances. Alongside late payment, owners must also deal with business rates costs and find the capital to meet requirements relating to auto-enrolment, GDPR, cybersecurity, digitalisation, broadband technology, staff recruitment, retention and training, and more.

And of course, all these costs must be managed against the backdrop of economic dysfunctionality, with uncertainty surrounding Brexit impacting market performance. The collapse of Thomas Cook is the latest example of how conditions are impacting business. While blame for the demise of the storied travel company lies primarily with the extraordinary level of debt it was carrying, the affect of prolonged consumer caution undoubtedly helped push it over the edge.

So, how can small businesses avoid cash flow headaches?

Alternative finance has a key role to play.

In the wake of extended caution from traditional lenders, the likes of invoice finance, asset finance, peer-to-peer lending and crowdfunding are redrawing the small business funding landscape. These facilities, which offer a more personalised approach to lending, are helping small businesses grow. They are providing them with access to capital, on an affordable and flexible basis, to help manage cash flow and for essential investment.

This is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to invest in new resources.

If small business owners want to realise their growth ambitions, a solution to cash flow problems is needed. This is why it is vital that these decision-makers are aware of all the SME lending facilities available to them, including alternative finance.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.