Scottish firms facing pressure on cash flow

Scottish businesses have some £32 billion tied up in working capital, equivalent to 11 per cent of total revenues, a study today reveals.

Bank of Scotland said its analysis of thousands of businesses indicated that this was being driven by a combination of business growth and falling efficiency in managing customer payments and stock.

It said the situation was putting pressure on cash flow and making it harder for firms to deal with any unforeseen challenges or opportunities.

Simon Quin, area director for global transaction banking at Bank of Scotland, said: “Revenue growth is good news for any business, but to improve efficiency is going to take investment and that requires cash flow.

“Small firms in particular are taking even longer to free up cash from things like inventory and unpaid invoices. The longer that money remains unavailable, the less firms can invest in growth, new machinery or pay down debts.”