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Most U.S. SMEs Struggle With Cash Flow, Survey Says

A new report from Dun & Bradstreet and the Pepperdine Graziadio School of Business and Management finds the majority of small- and medium-sized enterprises in the U.S. are facing cash flow challenges.

The survey, the Q2 PCA Index, released Thursday (June 29), found 66 percent of U.S. SMEs say they have faced working capital challenges in the last three months, the highest rate the surveyors have seen in five years. Those working capital challenges were the reason businesses sought financing, the report said. It represents a 22 percent increase from Q2 2016.

Women- and minority-owned businesses are feeling even greater working capital pressures, as 72 percent of women-owned SMEs, and 80 percent of minority-owned SMEs, reported this issue.

A key driver behind cash flow woes is delayed payments. More than a fifth of SMEs said their accounts receivables payments have slowed over the last three months, with small businesses reporting this issue as a greater hinderance to growth than their medium-sized peers. Women- and minority-owned businesses also reported greater effects of slowing AR payments on their ability to grow, the survey found.

“While access to capital for small businesses has steadily increased since the Great Recession, these businesses are still feeling the effects of being the last paid on the totem pole,” said Dun & Bradstreet lead economist Bodhi Ganguli in a statement. ”While it’s great that the banks and alternative lenders are lending at more accessible rates, the capital issues businesses are facing are unfortunately coming from the slowed payments from their business partners. As the Federal Reserve continues to raise the interest rate and the cost of borrowing increases, small businesses will likely feel this crunch more and more.”

Researchers also found a slight increase in SMEs’ demand for working capital year-over-year, as well as increased concern over federal interest rate hikes. Twenty-eight percent of small businesses said they are concerned rate increases will challenge their ability to access working capital (compared to just 7 percent of mid-sized firms).



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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