It has been reported in the Telegraph that businesses are struggling to pay debts and cash flow problems that could leave companies unable to fund any future recovery are affecting 1 in 4 small businesses. The Telegraph reports that a study of accounts filed by 25,000 firms with sales of between £5m and £25m found that 24% have insufficient funds to pay their short term debts. These are statistics that many people in business will find both relevant and concerning.
There are measures that can be taken within a business to assist with its cash flow. It is important that businesses actively manage their debtors and have effective credit control procedures in place. Businesses need to look into their cash management process on both a long and short term basis, even those businesses that may still be doing well despite the downturn. Reviewing existing finance arrangements and exploring alternative ways of raising working capital should also be considered.
If your business is experiencing financial problems, then assistance should be sought at the earliest opportunity. It may not necessarily be too late to save a business if specialist advice is sought at the earliest opportunity.
By commercial solicitor, Nicola Whittle