The aim of this research was to understand how cashflow issues can affect the sustainability of the SMEs within Portsmouth area who bank with Barclays. The scope of this research was limited and could not be completed as expected due to the ongoing COVID 19 lockdown. The research conclusions are based on telephone interviews with two SMEs, a case study and background desk research.
Both the SMEs are aware of the basic facilities available from the bank. Most of the banks will not make decisions just based on the way the bank accounts are managed. Especially when it comes to large borrowings such as commercial mortgages, banks also need to look into their past year of trading accounts, management accounts and cashflow accounts. If the figures from these accounts are not convincing and cannot prove that the business can afford repayment, then the loan request will be declined. To confirm this, a full set of accounts were obtained from both of the SMEs and this was carefully analysed. The only way to prove the business can afford the loan is by cutting down the associated costs of the business and increasing the footfall to the shop. This cannot be done instantly. However, cashflow management will be a good starting point and eventually the affordability will follow, and a good business will be built.
Throughout the primary and secondary research, it was identified that if the cashflow issues are not addressed at the early stage, it will affect the sustainability of the business. So, it was crucial to identify what is actually causing the cashflow issues.
To conclude, the business may not sustain if cashflow issues arise and get worse. The best option is not to get to that stage and prevent it . The only way to prevent is by a good management and decision making within the business by analysing the pros and cons. The business owners are ultimately responsible for any issues happening within the business.