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Social enterprises seek working capital finance to maintain a steady cash flow

A report carried out by Social Enterprise UK and the Access Foundation found that due to increased challenges in their day-to-day operations, many social enterprise companies are seeking working capital finance to keep their business running smoothly.

As more than 73% of social enterprises receive over three quarters of their income from trading, it is vital that they have a steady cash flow. The report studied the changing financial status of social enterprises over four years, and found that maintaining working capital was becoming increasingly difficult.

In 2011, only 28% of social enterprises sought working capital finance, however over the following four years this total increased to 43% of companies. This rise could be due to these organisations working with budget cuts, meaning tighter margins and restricted contracting and sub-contracting arrangements.

The report suggests that struggling enterprises may need to look to alternative finance as a means to boost working capital, due to government grants being made increasingly difficult to attain. Those enterprises located in more deprived areas may struggle further to receive government help, as costs, such as business rates, are higher in areas that don’t generate a large amount of income.

It is also reported that working capital finance for social enterprises needs to be flexible, to fit around their needs and allow them to build resilience in their market. A business cash advance allows enterprises to quickly receive funds to boost working capital, with flexible repayments that fall in line with card takings.

With no late payment or early repayment fees, a business cash advance enables companies to access funds without the fear of incurring further costs. To find out how a business cash advance could help boost working capital for your business, get in touch with one of our advisors.

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