A third of SME leaders are unable to correctly define cash flow even though the majority have faced cash flow problems within their business.
New research from Novuna Business Cash Flow suggests that 82% of SMEs have encountered cash flow difficulties, with late customer payments (36%) and seasonal shifts in sales (35%) the most common triggers.
Broader economic uncertainty was also a factor, with more than a quarter (27%) citing unexpected changes in trading conditions as a cause of disruption.
The findings come at a time when the Autumn Budget has set out a cautious economic outlook for UK companies, adding further pressure to the already challenging environment in which many SMEs are operating, Novuna said.
This gap between knowledge and day-to-day experience highlights the scale of the challenge for UK SMEs, it added.
Small and medium-sized firms were the most likely to report difficulties (91% and 90% respectively), followed by micro businesses (84%). Even among sole traders, two-thirds (68%) had been affected. On average, SMEs said they experienced cash flow issues 7.4 times a year, with medium-sized firms almost reaching ten separate instances annually. Yet more than half of SMEs (55%) still rely on short-term fixes – most commonly cutting costs, taking out loans or borrowing from friends and family – while only a minority turn to longer-term options such as invoice finance (11%) or outsourced credit control (5%).
John Atkinson, Head of Commercial and Strategy at Novuna Business Cash Flow, said:
“These figures show that cash flow problems are not occasional – they're part of the everyday reality for most SMEs. When challenges come up repeatedly across the year, it not only puts pressure on finances but also limits a business's ability to plan ahead and grow with confidence.”
The research also explored how decision makers respond when disruption occurs. A third (33%) said they feel confident in managing issues when they arise, while more than a quarter (28%) said cash flow pressures motivate them to strengthen their financial planning.
But for others, the strain is significant. Almost a quarter (24%) admitted to feeling stressed or anxious about meeting financial obligations, while one in five (19%) said cash flow worries left them uncertain about the future of their business.
John continued:
“While many SMEs show resilience, we cannot ignore the emotional toll that cash flow disruption brings. Stress, frustration and uncertainty can build quickly when late payments or unexpected costs hit. That's why timely support, alongside funding solutions, is so important.”
According to government figures, the UK is home to 5.5 million private sector businesses, 99.8% of which are SMEs. If the survey results are applied nationally, that would mean almost two million SME leaders across the country may not fully understand what cash flow is – despite most of them experiencing problems several times a year.
This rising pressure is also reflected in online behaviour. Search trend data from Google shows that searches for ‘small business cash flow management' have risen by 80% year-on-year, highlighting the growing number of SMEs seeking guidance on how to manage cash flow more effectively. The survey also found that one in five SMEs (18%) look online for advice when facing cash flow pressures – reinforcing the shift towards digital information-seeking.
