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Is Your Small Business Struggling With Cash Crunches?

October 2nd, 2012 ::

By Karen Axelton

Despite their best efforts to manage their companies’ cash flow, half of small business owners have suffered a sudden cash crunch in the past 12 months, according to a new survey from Citibank.

The Citibank Small Business Pulse found that weak sales were causing cash flow concerns for the majority entrepreneurs. Even though 73 percent say they personally manage their cash flow daily—not trusting the job to anyone else—30 percent say they are still struggling with challenges such as slow or delinquent receivables and customer bankruptcies, and 24 percent say late or non-payments have caused their companies an unexpected cash crunch.

Despite their awareness of the importance of cash flow management, small business owners in the survey admit that they struggle to crack down on customers. Some 78 percent say they’ve extended customers’ payment terms in the last 12 months, and nearly one-fourth say that “making a collection call” is the most uncomfortable aspect of managing their business finances.

The cash-flow issues these businesses faced weren’t all due to slow-paying customers. Forty-one percent of entrepreneurs blamed “lackluster consumer spending” for their cash crunch, while 28 percent said it was due to expected sales failing to materialize.  Overall, the need to maintain sales was the number-one concern small business owners expressed, cited by 78 percent.

Still, small business owners in the survey feel hopeful about their own business finances, even if they don’t feel as rosy about the economy as a whole. While 85 percent think the nation might still have a double-dip recession, 43 percent think their business’s 2012 sales will top last year’s, and 56 percent expect their businesses will either meet or exceed their 2012 revenue goals.

Small business owners have reason to feel confident. To achieve those sales goals, more than half of companies surveyed say they have “reinvented” their businesses in the past year, either adding new products or services, overhauling their technology, or both, in order to become more competitive in a tough marketplace.

What can you do to keep your cash flowing? Small business owners in the survey are doing all the right things—except for one. It’s tough, but following up on late-paying customers and doing all you can to ensure you get paid is essential if you want to keep your business in the black.

How is your business’s cash flowing?

Image by Flickr user Alan Cleaver (Creative Commons)


The views expressed here are the author's alone and not those of Network Solutions or its partners.

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