Partner Article

N.E. businesses suffering cash flow problems lower than national average

Numbers of businesses in the region suffering from cash flow problems are significantly lower than the national average, according to research by Lloyds TSB.

Only 20 percent of businesses in the region are experiencing difficulties, in comparison to 63 percent nationally. Of these companies, 44 percent cited late payments as the main cause of problems.

Businesses most likely to be affected by cash flow problems are those in the construction, transport and communications industry, while hospitality and leisure firms are least likely to be affected.

Lloyds TSB is now urging businesses to consider implementing an invoice finance facility to ensure working capital isn’t affected by late payments.

Nick Robson, regional director for Lloyds TSB Commercial Finance in the North East and Cumbria, said: “Regionally, the number of firms reporting cashflow issues has dropped by 13 per cent since the second half of 2010, and those affected by late customer payments has decreased by 18 per cent in the same period.

“These are encouraging figures, particularly since most other regions across the UK actually reported an increase in cashflow issues.”

Companies must continue to exercise prudence by implementing stringent credit control functions to avoid liquidity being affected by late payments, even when the economy begins to recover.

He added: “As growth opportunities become more prevalent for businesses, we expect invoice finance and complementary facilities to continue to be utilised by companies wishing to grow this year and next.

“The funding, which advances the value of issued invoices, bridges the gap between requesting and receiving payment. This is particularly helpful when business are increasingly trading abroad, which can stretch payment times to over 90 days, straining cashflow.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .