Cashflow ‘biggest threat to survival’

Despite a number of government initiatives and bank promises, cashflow remains the biggest threat to business survival in Ireland.

The Close Brothers Business Barometer, which surveys SMEs, found that more than 40% of businesses believe that cashflow poses the greatest threat.

Staff and late payments were the other main business woes highlighted by the survey, with 11% of firms saying that late payments were their biggest worry, whilst almost one in 10 cited a lack of skilled staff as their most significant concern.

Managing director of Close Brothers Commercial Finance (Ireland), Harry Parkinson, said that while some businesses were growing they were still in a perilous financial state.

“It’s clear that access to working capital and maintaining a reliable cashflow are a concern for a large number of SMEs.

“Many businesses appear to be experiencing growth but they could still face financial difficulties. There is a danger they will struggle to survive should they fail to meet the financial demands of an increased workload,” he said.

While growth is always positive for businesses, hiring new staff to deal with an increased volume of sales can eat into a company’s cashflow.

“Positive signs of recovery may finally be emerging, and it’s promising to see firms planning to increase staff numbers. Job creation can itself bring unique difficulties. however, as this form of growth is dependent on a reliable cashflow,” Mr Parkinson said.

He added that with banks being unwilling to lend, businesses were increasingly looking to use alternative methods to access money.

“Asset-based finance is an increasingly popular option, as it is a flexible form of funding that allows firms to unlock the capital tied up in their existing invoices and assets. Businesses can alleviate pressure on their cashflow, which in turn can facilitate their growth and development strategies,” he said.