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Small businesses are being urged to do more about managing cash flow and fighting against late payments in an attempt to sure up business in this downturn.

According to HSBC, more than two million small businesses say the issue they'd most like this month's Budget to address is the problem of late payments. The bank says payments owed to small business have risen by almost 40% in the last year to £26bn and many businesses are caught in an unsustainable cycle of companies billing quicker and taking longer to pay. HSBC warns that some businesses are being forced to wait up to six weeks after the agreed payment date to receive payment. This hampers cash flow and puts the whole business in jeopardy.

With the recession placing increased pressure on UK businesses – two thirds of small business say to HSBC that managing cashflow in the current economic climate is their biggest challenge for growth. This means having all your finances in order, up-to-date and running as cheaply as they can is paramount.

Noel Quinn, HSBC's head of commercial banking UK, says: "We are urging businesses to ensure they have the right financial tools in place and are seeking appropriate advice to help them weather the storm. Ultimately a healthy cashflow is critical in a downturn and businesses do have the option, through invoice finance, of working with a financial partner to implement their payment collections on their behalf – allowing them to focus on the running of their business."

To make sure you are managing your finances the best you can, talk to a financial professional about your venture. Using your assets, your business potential and your ability to borrow money you can make sure that cash flow carries on flowing throughout 2009.

SOURCE: HSBC, 18/04/09

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