Cash flow problems for very small businesses

Rising energy and raw materials prices, as well as higher borrowing rates, are having a significant impact on the cash flow of very small businesses. A finding confirmed by a BVA - American Express survey published on May 16. Focus on these inflation-related difficulties.

Sharp rise in VSE spending since 2022

The survey shows that the main expenditure items for VSEs have risen sharply in recent months compared with the end of 2022:

  • Energy costs (electricity, gas, etc.) have risen the most. This is between 11% and 25% for almost half of managers (43%).
  • This is followed by expenditure on the purchases necessary to run the business (raw materials, goods and services). 29% of those surveyed stated that these costs had risen by between 11% and 25%.
  • Finally, expenses linked to business travel (company cars, business trips, etc.) are also affected. For over 38% of VSE managers, the increase is in excess of 10%.

Companies also have to contend with persistent customer payment delays. According to the BVA - American Express survey, nearly 20% of business leaders have experienced late payments over the past 12 months. These average 49 days.

Given these factors, only 8% of those surveyed consider that their cash flow has improved in recent months. 28% of them (+10 points compared to 2022) make this their top priority this year.

Managers are optimistic

Despite the impact of the current economic climate on their cash flow, 69% of VSE managers are optimistic about the future of their sector. With a view to diversifying their means of financing, some are considering alternative solutions such as fractional payment (32%, +9 points compared to 2022) or deferred payment (27%, +7 points compared to 2022).

This diversification helps to " limit the strain on cash flow, which can be a major risk to the financial health of small businesses if their activity slows down or if customer payment delays increase ", reports Sylvia Desloubières, Sales Director in charge of small and medium-sized businesses at American Express France, in the survey.

Among the business sectors surveyed, the retail sector is the most pessimistic. Executives working in this sector point to the high cost of raw materials as the reason for their cash flow difficulties. A third consider their sales to be falling. Conversely, in the service sector, VSEs confirm that their sales have remained stable in recent months.