Cash Flow Problems? Here Are Your Options.
Approximately 50,000 UK businesses fail each year primarily due to cash flow problems, according to the Federation of Small Businesses. The most common cause is late payment from customers — UK SMEs are owed an average of £22,000 in overdue invoices at any time. The fastest solution for B2B businesses is invoice finance, which releases 70-95% of unpaid invoices within 24 hours. But it's not the only option.
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Approximately 50,000 UK businesses fail each year due to cash flow problems, with late customer payment being the most common cause. The fastest solution for B2B businesses is invoice finance, which releases 70-95% of unpaid invoices within 24 hours.
Summary
UK SMEs are owed an average of £22,000 in overdue invoices at any time. We rank 7 solutions: invoice finance (best for most B2B), negotiating terms (free), overdrafts (cheapest but scarce), merchant cash advances (card businesses), revolving credit, business loans, and chasing late payers.
This Page Covers
7 cash flow solutions ranked by speed, cost, and accessibility for UK small businesses, with guidance on which solution fits which situation
Not Covered Here
Individual provider reviews, detailed cost breakdowns, provider-specific guides
7 Solutions, Ranked
Invoice finance
Best for most B2BAdvances 70-95% of your unpaid invoices within 24 hours. Scales with your business. No property security. Accepts bad credit. £22.7 billion UK market — the biggest working capital product by far.
Cost: 0.5-3% of invoice value | Speed: 3-10 days setup | Min turnover: £50,000
Negotiate better payment terms
FreeAsk customers for shorter terms, offer early payment discounts (2/10 net 30), or push suppliers for longer terms. Costs nothing but requires negotiating power. Most effective when you're a valued supplier the customer can't easily replace.
Cost: Free | Speed: Immediate (if agreed) | Limitation: Large clients rarely budge
Business overdraft
Cheapest option if you can get one (3-8% EAR). But banks have cut SME overdraft availability by 40% since 2020. Fixed limits don't grow with your business. Can be recalled on demand.
Cost: 3-8% EAR | Speed: Days-weeks | Limitation: Increasingly unavailable
Merchant cash advance
If you take card payments (retail, hospitality, e-commerce), a provider advances cash against future card revenue. Repayment is a percentage of daily card takings — no fixed monthly payment. Fast (1-3 days) but expensive.
Cost: Factor rate 1.1-1.5x | Speed: 1-3 days | Limitation: Card payment businesses only
Revolving credit facility
A credit line (like an overdraft but separate from your bank account) you draw from as needed. Available from challenger banks and alternative lenders. More expensive than overdrafts but more available.
Cost: 8-20% on drawn amount | Speed: 1-4 weeks | Limitation: Credit-dependent
Business loan
A fixed lump sum repaid over 1-5 years. Provides certainty but doesn't solve recurring cash flow gaps — when the loan runs out, the problem returns. Best for one-off capital needs, not ongoing working capital.
Cost: 4-15% APR | Speed: 1-4 weeks | Limitation: Fixed amount, doesn't scale
Chase late payers
You can charge statutory interest (8% + base rate) under the Late Payment of Commercial Debts Act, send formal demands, or use a debt collection agency. But this takes time, damages relationships, and doesn't solve the immediate cash gap.
Cost: Free (or 10-25% if using collection agency) | Speed: Weeks-months | Limitation: Relationship damage
Which Is Right for You?
If you invoice other businesses on credit terms → invoice finance. If you take card payments → merchant cash advance. If you just need a short-term buffer → overdraft or revolving credit. If you need a lump sum for a specific purpose → business loan.
Use our cost calculator to see what invoice finance would cost for your specific situation.
Oliver Mackman
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 5 April 2026