Cash flow is still a major challenge to large numbers of UK businesses, according to new research from Santander Corporate & Commercial.

17% of respondents in a UK-wide study said they were ‘very’ concerned about managing cash flow effectively over the next 12 months, with a further 27% saying they were ‘quite’ concerned.

46% of businesses report being hit by at least one recent cash flow setback – with late/ failed payments from customers (24%), weak sales (8%) and unexpected costs and charges (7%) the top three reasons cited.

Larger UK businesses – those with annual revenues between £5 million-£20 million – are less concerned about cash flow compared than smaller companies, with 6% saying they are ‘very’ concerned, compared to 14% of firms with annual revenues between £500,000 – £1 million, and 22% in the £250,000 – £500,000 bracket.

However, the research revealed greater use of cash flow management solutions such as invoice finance, asset finance and supply chain finance by larger businesses: one in four (25%) firms with turnovers between £5 million – £20 million have used invoice finance or intend to over the next 12 months, compared to 12% with revenues of £500,000 – £1 million and 2% in the £250,000 – £500,000 tier.

Marcelino Castrillo, head of SME at Santander Corporate & Commercial, said cash flow clearly remained a huge challenge for thousands of UK businesses.

He said: “However, many businesses are missing out on effective alternative financing solutions such as invoice or supply chain finance – or relying excessively on loans and investments – and in doing so, are opening themselves up to unnecessary cash flow volatility and business risks.

“It can be very beneficial for companies to take a regular review of their resources, both in terms of cash flow and their wider business plans, to ensure they have the best toolkit to equip themselves for managing payments and dealing with the unexpected hurdles that all businesses face from time to time.”