A recent survey by YouGov and Simply Business has revealed that most small companies have cash reserves of £10,000 or less.
Shockingly, 20% have no cash reserves at all, while three in ten have £500 or less in their business accounts. This is only enough to keep them going for a few weeks at best.
It is, therefore, unsurprising that many small and medium-sized enterprises (SMEs) go out of business quickly when something goes wrong. Often it is as simple as a customer not paying their invoice.
At DJB, we have lent money to many SMEs who just needed a relatively small amount of capital to take them through a short-term cash flow issue.
Worryingly, the research showed that many of these enterprises had no idea of how vulnerable they were. Despite only having enough cash in the bank to tick over for a few weeks, 20% of business owners believed that they could keep their company going for six months.
Small firms are largely unprepared for unexpected situations, such as flooding, key personnel going sick or too many customers not paying invoices. Many turn to banks for loans to help them through such crises, but most are refused.
Few SMEs realise that by using an experienced asset finance broker, like us at DJB, they can use their assets as collateral for a loan. Many small businesses miss the chance to take on new work because they do not have enough capital to buy the raw materials to fulfil big orders. We can help with that situation too.
Witten by Mark on