8 in 10 small business owners hit by cash crunch

To keep business their afloat, some owners use their personal savings.

Small business owners resort to using personal savings, increasing their prices, and not paying themselves to cope with rising costs and make a profit, according to a report by Xero.

Findings from the report showed that 31% of owners have not been able to pay themselves, whilst 19% resort to their personal savings to keep the business afloat.

In the past 12 months, 83% of small businesses have experienced cash flow issues, affecting their ability to grow, hire new staff, and invest.

A factor affecting the cash flow of small businesses is late payments.

Due to late payments, 27% of businesses had to pay their bills, whilst 41% needed to negotiate payment terms with suppliers, and 30% experienced stalled revenue.

Despite cash flow issues, the majority (81%) of small businesses surveyed feel reassured about their financial well-being, with 40% describing themselves as confident and secure. Many (61%) also believe they are on track to achieving their financial goals.

To address cash flow issues,  small business owners are likely to seek accountants and bookkeepers.

Hospitality (90%) and manufacturing (85%) are some sectors that are more actively seeking external expertise to manage their processes, while retail (57%) and education (56%) industries were less inclined to do so.