Cash Flow Challenges for Small Businesses: Common Problems and Solutions

Assuming you are offering a product or a service that companies want to buy, and that each time you are doing so it is a profitable sale, managing the finances of a company should be a piece of cake, right? Alas, if only life were that simple…

Payment delays are a common cash flow challenge for businesses, and small businesses in particular really feel the brunt of late payments when it comes to managing their own payment obligations. Luckily, there is a solution that can help businesses mitigate cash flow challenges like this.

Cash flow challenges facing small and medium-sized businesses

We all know when we have to pay our suppliers, our staff, VAT, corporation tax, etc., but we rarely know quite when our customers will pay us – this is the single biggest cash flow challenge small to medium-sized businesses need to contend with. Additionally, if we are in the happy position of having a loyal customer base who regularly pay to the agreed payment terms, more often than not, those terms are just a little too long, meaning that there is rarely enough cash in the bank to sleep well at night.

Late payment of invoices is a serious problem in the UK. 400,000 of UK’s small and medium-sized businesses are suffering due to late payments, and missing their own payment obligations as a result. According to research from Pay UK, an estimated £23.4 billion of late invoices are owed to these firms. Furthermore, if these late invoices become bad debts, they can leave businesses struggling to survive.

Invoice finance: A solution to cash flow challenges

There are many tips and tactics to manage working capital but there is one single thing that will have a positive, transformational effect on your cash flow – getting paid the day after you raise your invoice. Imagine that? You deliver the product to your customer on Monday, raise the corresponding invoice on Tuesday and the cash lands in your account on Wednesday. No more sleepless nights trying to figure out how you are going to make payroll, fund your latest order, or take on that new contract.

So, how do you get all of your customers to agree to pay you within 24 hours? Well, you don’t – there’s no advantage for them in paying bills early. So, you’ll need the help of a third party; which is where invoice finance comes in.

Done well, invoice finance will pay you most of the value of an invoice soon after you have raised it, greatly enhancing your working capital. However, there are quite a few providers that might not suit your needs and the ones that you might be able to work with can be expensive and require a lot of administrative effort to apply for and to run the facility.

Get 100% of your invoices funded quicker with Hydr

Indeed, invoice finance management, while beneficial for addressing cash flow challenges, can be resource-intensive. This is where Hydr comes in with a more accessible invoice finance proposition. We have created a digital platform that enables you to get set up with a completely free account in around 15 minutes.

We then give you indications of whether or not we can fund your ledger within seconds, and the fees we charge are fixed at the point at which the invoice is funded (and it never changes, even if your customer is late in paying). Our proposition is that we fund 100% of the value of your invoices minus that fixed fee – with Hydr, you receive the highest percentage of your invoice upfront – right when it’s of the most value to you.

Tackle your cash flow challenges with invoice finance from Hydr

We believe we have created the most simple-to-understand and user-friendly invoice finance product on the market. Although we’re still relatively new to the invoice finance market, our customers are constantly telling us of the transformational impact our product has had on their working capital and, frankly, their sanity, too!

You can take a number of small steps to tinker around the edges of addressing your cash flow challenges, or you can take one giant leap for your company and start using invoice finance from Hydr.

Sign up now to start your cash flow transformation with our help, or contact our friendly team for more information on how Hydr can help your business overcome cash flow challenges.

P.S. If you ever get all of your customers to simply agree to pay you the next day, stop whatever job you are doing and write a book telling all of us how you did it – you’ll sell millions of copies!!