Dutch SMEs are struggling with cash flow

10 January 2020

Recent research reveals more than one in three SMEs find cash flow a challenge

A connection lies between unpaid invoices, banks and the struggle that SMEs face

The financial service companies Euler Hermes and Bibby have released the findings from their annual survey. Their research revealed that many SMEs in the Netherlands are struggling with capital. According to the survey, managing debtors is greatly contributing to this issue of cash flow. It was shown that of those who participated, more than 40% struggled with the specific challenge of managing late or unpaid invoices, with 32% indicating it was a major problem.

Other obstacles for Dutch SMEs

Findings from the survey identified another culprit in the struggle that Dutch SMEs face with their finances: SMEs in the Netherlands have the largest banking-financing gap in Europe, receiving fewer bank loans than SMEs in other countries of the EU. This is particularly bad news since these elusive bank loans are still considered to be the most important external source of financing for Dutch SMEs. 

New financing solutions are needed

However, things are not hopeless for struggling SMEs in the Netherlands. Fintechs are continuing to create new ways to finance SMEs, and this situation is presenting an opportunity for them to gain ground on banks. Factris, a fintech company based in the Netherlands, has been customising solutions to help struggling SMEs in the EU.

Factris specialises in “factoring”, which takes a unique approach to financing. The process of factoring is simple: Factris purchases an unpaid invoice from an SME for a small fee, providing them with almost-instant cash flow. Factris then follows through on collecting the payment from the original debtor to the invoice.

“Factris has been aware of the struggles SMEs face for years. Customers don’t pay their invoices, so cash flow runs dry. And banks only want to give loans when you already have money,” comments Factris CEO Brian Reaves. “That’s what drives us at Factris: when banks say “no” to SMEs, we say “yes”. Our solutions that provide low-cost working capital are not merely an alternative- they are becoming one of the best solutions for SMEs in need of cash flow.”