Figures from VC firm Albion Ventures show that more than one in five see cash flow as a barrier to growth, and that this is a particular problem for aspirational firms which have tried to raise growth funding. Patrick Reeve, Managing Partner at Albion Ventures said: ?It?s a clear sign of the improving economy that cash flow difficulties were cited by small businesses as a barrier to growth rather than a threat to survival. ?As a result, cash flow appears to be a problem of success rather than failure as many businesses find their expansion ambitions become derailed because they cannot maintain a sufficiently healthy cash flow. It is therefore no surprise that one in three businesses is looking to raise finance over the next 12 months, up from just 10% in the past year.? Separate stats from R3, the trade body for insolvency professionals, suggested that businesses are struggling with overtrading and late payments. It found an increase in the number of businesses who were only paying the interest on their debts from 103,000 in november 2013 to 154,000 now. Giles Frampton, president of R3, says: ?The first flush of growth generated plenty of cash for businesses but now some are experiencing the side-effects of growth too. Over-trading and late payment can easily put businesses with bulging order books in a position where cash flow becomes a major headache.? ?Businesses will get into trouble if they?re trying to run before they can walk and don?t get paid quickly enough for the work they?re doing. Access to new finance is still tight so businesses low on cash have limited options to give themselves some breathing room.? ?Making the minimum payments on debts or renegotiating payment terms with creditors can free up some extra cash and buy some time, but it?s not a long-term solution. Healthy cash flow is critical?
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