According to the latest industry research, almost one in five small businesses fell into their overdrafts in the last year in a bid to manage their cash flow.

The survey by cashflow management company Fluidly involved 19,799 companies and found that those who had to use their overdrafts increased from 13.9 per cent in March 2019 to 17.8 per cent in January 2020.

Factors such as late payments, Brexit and economic uncertainty look to have had a detrimental effect on many businesses, with significant numbers going into their overdrafts in nine of the 11 months tracked as part of the research.

The worst-hit regions in the UK were Plymouth (35.7 per cent), followed by Southampton (34.3 per cent) and Peterborough (32.8 per cent).

Food and drink makers were the worst-hit industry, with 34.7 per cent of respondents from that sector forced to dip into their overdraft. Product manufacturers (33.3 per cent) and farmers (32.6 per cent) also struggled with cash flow over those 11 months.

Those figures suggest that sectors investing large amounts upfront were found to suffer more than those businesses who did not.

Caroline Plumb OBE, founder and CEO of Fluidly, said: “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.

“An estimated 50,000 businesses go under each year due to late payments, costing the economy £2.5 billion 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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Smailes Goldie Group

Smailes Goldie Group

We are a leading firm of chartered accountants, tax advisors and business advisors offering a full range of financial advice for you, your family and your business. Our clients range from SMEs and large corporations to Owner Managed and Family Businesses, Professional Partnerships, Sole Traders, New Businesses, Charities and the Not for Profit sector.