UK Businesses Face Cash Flow Crisis Amid Rising Risks
A significant number of UK businesses are grappling with increasing risks and cash flow concerns, according to recent findings. 41% of businesses express worry about the escalating risks in the coming year, with 8% questioning their future prospects.
The study reveals a stark reality: 30% of firms have less than four months of operating cash flow, and alarmingly, 9% have under two months. This widening resilience gap leaves UK SMEs vulnerable to business risks and accessible liquidity.
The past 12 months have been challenging, with 89% of businesses reporting substantial impacts from risks. Notably, 62% incurred costs exceeding £100,000. Self-insuring risks exposes SMEs to losses over 700% higher than cash app premiums, highlighting the need for robust risk management strategies.
Customer fragility is a major threat, with late payments affecting 21% of businesses and customer insolvencies threatening 17%. Business risks cost UK firms hundreds of thousands in the last 12 months, equivalent to 76% of accessible emergency funds. Top business risks include rising costs (51%), political/policy shifts (33%), and AI-driven risks (32%).
The findings underscore the urgent need for businesses to strengthen their risk management strategies and ensure adequate cash flow reserves. With 17% of medium-sized businesses having less than £50k to absorb sudden shocks, the importance of proactive risk mitigation cannot be overstated.
