eCapital survey: 15% of UK B2B SMEs face survival-threatening cash-flow pressure

More than one in seven UK business-to-business SMEs surveyed by eCapital say severe cash-flow pressure is threatening their survival, while 39% report that restricted liquidity has prevented them from pursuing growth opportunities over the past year.

The findings, published on 13 October in eCapital UK’s Created on Cash Flow report, highlight a widening problem for businesses that must finance wages, materials and inventory before receiving payment from their customers.

The research, conducted by Censuswide among 500 financial decision-makers at B2B SMEs, found that 15% considered cash-flow pressures severe enough to threaten their business’s survival.

Among respondents who had experienced cash-flow difficulties, late customer payments were the most frequently reported cause, cited by 55%. Rising operating costs, including energy, were identified by 42%, while 35% pointed to higher wage costs or employer taxes.

The financial consequences extended beyond immediate trading pressures. Some 42% of respondents said they would increase investment in hiring, expansion or equipment if cash flow were not a constraint. A further 34% said they would take on more contracts and customers.

The findings also expose a reliance on borrowing arrangements that may be poorly matched to businesses’ working-capital cycles.

Although 85% of surveyed firms had used at least one loan, overdraft or credit facility during the previous year, only 14% reported having a structured working-capital solution. Overdraft extensions had been used by 38%, while 37% had turned to credit cards or informal borrowing and 29% to short-term loans.

eCapital highlighted the experience of Outdoor Living Ltd, a North West England garden furniture wholesaler, as an example of the financing challenge.

The company faced lengthy import lead times that restricted its ability to purchase inventory despite customer demand. According to eCapital, invoice finance helped it commit to larger stock programmes. Turnover increased from £1.2m in 2023 to £2.2m in 2025, although the figures do not establish how much of that growth was attributable to financing.

The report arrives as the Commercial Payments Bill progresses through Parliament. Some 93% of respondents said they had accepted unfavourable payment terms to secure business.

The findings suggest that tackling late payments alone may be insufficient. Businesses with long production, import or inventory cycles can remain constrained even when customers pay on time, strengthening the commercial case for financing tied more closely to receivables and stock.