Almost one in six (17%) respondents in a UK-wide study (1) said they were ‘very’ concerned about managing cash flow effectively over the next 12 months, with a further 27% saying they were ‘quite’ concerned. Around half (46%) of businesses report being hit by at least one recent cash flow setback – with late/ failed payments from customers (24%), weak sales (8%) and unexpected costs and charges (7%) the top three reasons cited.
Larger UK businesses (those with annual revenues between £5 million – £20 million) are less concerned about cash flow compared than smaller companies, with 6% saying they are ‘very’ concerned, compared to 14% of firms with annual revenues between £500,000 – £1 million, and 22% in the £250,000 – £500,000 bracket. However, the research revealed greater use of cash flow management solutions such as Invoice Finance, Asset Finance and Supply Chain Finance by larger businesses: one in four (25%) firms with turnovers between £5 million – £20 million have used Invoice Finance or intend to over the next 12 months, compared to 12% with revenues of £500,000 – £1 million and 2% in the £250,000 – £500,000 tier.
Marcelino Castrillo, Head of SME at Santander Corporate & Commercial, said: “Cash flow clearly remains a huge challenge for thousands of UK businesses. However, many businesses are missing out on effective alternative financing solutions such as invoice or supply chain finance – or relying excessively on loans and investments – and in doing so, are opening themselves up to unnecessary cash flow volatility and business risks.
“It can be very beneficial for companies to take a regular review of their resources, both in terms of cash flow and their wider business plans, to ensure they have the best toolkit to equip themselves for managing payment payments and dealing with the unexpected hurdles that all businesses face from time to time.”
| How concerned are you about successfully managing cash flow over the next 12 months?(1) | |||||
| By annual revenue segments | |||||
| Overall (%) | £250,000 – £500,000 (%) | £500,000-£1m (%) | £1m – £5m (%) | £5m – £20m (%) | |
| Very | 17% | 21% | 14% | 12% | 6% |
| Fairly | 27% | 34% | 22% | 41% | 21% |
| Not really | 25% | 35% | 26% | 18% | 26% |
| Not concerned at all | 29% | 10% | 36% | 26% | 43% |
| Don't know | 1% | 0% | 2% | 3% | 4% |
The research found just 4% of businesses that have used either invoice or supply chain finance to manage their cash flow said that it did not help their business, whilst businesses in the transport and logistics, manufacturing, production and wholesale industries sectors are most likely to have used and benefitting the most by using invoice or supply chain finance.
On a regional basis, firms in the North West and West Midlands are the most concerned about cash flow, with more than a third (36%) saying they were ‘very’ concerned compared to the South West, where firms were the least concerned (8%).
Greater London tops the regions for suffering from late or failed payments from customers (41%) as well as for unexpected costs and charges (21%). Unsurprisingly a third of businesses in Greater London (34%) – the equivalent of almost 100,000 businesses – say they are worried about cash flow over the next 12 months.
1 Research conducted by BDRC Continental amongst key decision makers at 451 UK businesses with a turnover of over £50,000 between 4-14 March 2013 using an online methodology
Santander Corporate & Commercial provides dedicated relationship banking support to businesses with a turnover of more than £250,000 through the bank’s 35 regional corporate business centres located across the UK. It is part of Santander UK plc, a full-service retail and commercial bank providing services to 25 million customers, with almost 1,200 branches. It is a wholly owned subsidiary of Banco Santander, managed autonomously, with its own local management team. Santander UK is firmly focused on the UK with c. 99% of customer assets UK-related. The total balance sheet remains UK focused, with a minimal net exposure after collateral to eurozone periphery countries only amounting to c. 0.4% of total assets.
Santander UK is subject to the full supervision of the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) in the UK. Santander UK plc customers are protected by the Financial Services Compensation Scheme (FSCS) in the UK.
Banco Santander (SAN.MC, STD.N, BNC.LN)is a retail and commercial bank, based in Spain, with a presence in 10 main markets. Santander is the largest bank in the euro zone by market capitalization. Founded in 1857, Santander had EUR 1.388 trillion in managed funds, 102 million customers, 14,392 branches – more than any other international bank – and 187,000 employees at the close of 2012. It is the largest financial group in Spain and Latin America. It also has significant positions in the United Kingdom, Portugal, Germany, Poland and the northeast United States. Santander had a pre-provision profit of EUR 23.559 billion in 2012, an increase of 2% from the previous year.
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Media Enquiries
Sarah Davies - Santander - 0207 756 4211
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