Media releasePublished on 14 November 2023

UK small business owners unable to pay themselves due to cash flow issues

Xero research reveals small businesses’ cash flow issues causing financial and personal repercussions

London — 14 November 2023 — Ongoing economic challenges have caused two in five (41%) small business owners to sacrifice their salaries, and one in three (34%) to use their personal funds, to keep their businesses running, according to new research from global small business platform Xero.

The Money Matters report found that economic fragility is causing half (50%) of small business owners to worry about their financial futures. Almost three-quarters (72%) of small business owners admitted experiencing cash flow issues in the past 12 months, with one in 10 experiencing significant difficulties.

Cash flow issues go beyond business

The financial impact of these cash flow issues is clear; the findings show that a quarter (24%) of small business owners are unable to pay company bills and overheads, and 18% experience stalled revenue. However, the effects also trickle down to the personal lives of owners and operators.

Of those who have felt a negative impact from cash flow issues, eight out of ten small business owners are affected by stress (82%) and anxiety (80%), while almost two-thirds have trouble sleeping (60%). Similarly, the toll of these financial obligations is reflected in 35% reporting a worsening diet and 29% saying they are missing out on time with family and friends.

“Cash flow challenges are more than just balance sheet discrepancies; this research reveals they are deeply personal struggles for business owners. The inability to pay themselves, coupled with the emotional and physical ramifications, paints a poignant picture of the sacrifices and struggles inherent in running a small business,” said Leigh O’Neill, EGM Money at Xero.

Charting a course to safety

Unsurprisingly, inflationary pressures have made managing cash flow a priority for many (62%) small businesses in the UK. The report also revealed that 56% of small businesses have raised prices in the last year. Other strategies used to overcome cash flow constraints and stimulate revenue include reducing overheads (35%) and reducing marketing spend (28%).

Despite the perceived importance of managing cash flow, the majority of small businesses are not using digital tools to help this process. Only 24% of respondents currently use accounting software to track payments, and just 8% use cash flow forecasting tools to help them predict and plan for future financial shortfalls.

Half (51%) of small business owners attribute inertia around digital tools to a lack of relevance, while a quarter prefer to manage payments using traditional methods (26%) or don’t think enough of their customers use digital payment methods to make adoption worthwhile (25%).

“Perennial economic uncertainty underlines the importance of financial resilience for small businesses,” added O’Neill. “We found that in the UK, many businesses were not leveraging the tools available to them. Small business owners have to find tools and strategies to manage cash flow that make their lives easier and crucially, plan for potential future cash flow issues.”

“There is powerful technology that can be far better leveraged to understand forecasts , offer real-time insights on what is coming in and out of the businesses. By digitising your accounting business management, while also making it as easy as possible for customers to pay, you can really help ease some of the cash flow pressures on your business.”

Michele Ferron, Founder of UK-based start-up Once Upon A Tuesday said: “Not knowing our cash position kept me awake at night. Using a cash flow management and forecasting tool helps us plan for the future by identifying potential cash flow gaps before they become an issue. Having this clear overview brings me peace of mind, letting us focus on running a thriving business.”

To read the full report, Money Matters: Navigating the impact of economic conditions on the cash flow of UK small businesses, visit the Xero website.


Media Contact

Xero UK Communications | Hannah Collett | +44 (7989) 202079 |

About Xero

Xero is a global small business platform with 3.95 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also has an extensive ecosystem of connected apps and connections to banks and other financial institutions helping small businesses access a range of solutions from within Xero’s open platform to help them run their business and manage their finances. Xero is a FIFA Women’s Football partner.

About the research

This report is based on the collated responses from an online survey conducted in English only, with 1,007 small to medium sized businesses (with up to 50 employees) across the UK, recruited from an online market panel. Responses were collected between 16th-27th September 2023.

For all media enquiries, please contact the Xero media team.

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