FinTech Fluidly has revealed that British small businesses are resorting to their overdrafts as cashflow crunch bites hard due to late payments, economic uncertainty and Brexit squeeze.
The automated cashflow management tool developer claims more than one million SMEs are dipping into their overdrafts to stay afloat with one in five small businesses having no cash in the bank. There the number of small companies tapping into their overdraft has risen from 13.9% in March 2019 to 17.8% in January 2020.
Fluidity analysed data of 19,799 companies connected to the Fluidly platform. There were 5.9 million businesses in the UK in 2019.
“For the first time, this unique data gives us a true picture of how tough it has been in the last year for small businesses to have cash in the bank when they need it and to look ahead with confidence,” said Caroline Plumb, founder and CEO of Fluidly. “With so many resorting to their overdrafts the demand for funding solutions when businesses need it most is only increasing.
“Business owners are no doubt being caused sleepless nights by concerns around making payroll, paying suppliers or tax bills, and chasing late payments, let alone whether they can invest in growth. We identified a real need to provide businesses with data to spot cashflow challenges and the funding solutions they’ll require, with enough time to access them.
“An estimated 50,000 businesses go under each year due to late payments, costing the economy £2.5bn. How many of these ‘failures’ are avoidable? If the rising number of businesses with no cash in the bank goes unchecked, tens of thousands more will go under.”
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