Cashflow remains a critical concern, with 36% of businesses citing short- or medium-term cashflow issues as a red flag. Effective cashflow forecasting, tighter credit control, and diversified funding sources are essential tools to mitigate these risks. Businesses should also monitor stock turnover and payment terms, as these can signal deeper financial stress.Despite these challenges, optimism is high, with 80% of businesses feeling positive about the next 12 months. This sentiment is reflected in growth intentions, where 40% of businesses plan to expand. However, investment decisions are mixed, 44% have delayed investment, while others are cautious due to uncertainty around trade tariffs and government policy.

To manage financial performance effectively, SMEs need to align their financial strategy with operational realities. This includes scenario planning to anticipate regulatory changes, geopolitical risks, and consumer shifts. Investing in financial literacy across leadership teams can also lead to better decision-making. Opportunities for growth, such as launching new products (57%) and expanding into new markets (34%), should be pursued with a clear understanding of cost implications and return on investment. Strategic investment, rather than reactive spending, will be key to sustaining performance.

In summary, SMEs must adopt a proactive stance in managing financial performance. By leveraging data, controlling costs, and investing wisely, businesses can navigate current challenges and position themselves for long-term success.