What can Spanish businesses with cash flow issues really do?

Covid 19 has changed everything for so many business owners in Spain, especially expats. We rely so much on foreigners coming to visit to keep the money flowing.

Cash flow issues can cut to the heart of any business. 80% of companies who close down do so, because of cash flow.

It is worse for seasonal industries who may be cash poor now, knowing that soon they will have a cash injection. What if they can’t survive until then?

During the pandemic, it is worse. Not only are small business owners missing their clients, maybe their suppliers are too.

One of the biggest drivers of the problem is a client not paying on time, but maybe they will pay, once they can. This is very different to a business simply shutting down due to lack of profit, higher than anticipated expenses or unexpected costs.


Some sectors in Spain that are especially exposed to Cash Flow Problems.

Almost any type of commerce can be affected by this issue. We need cash to survive, to pay our taxes, wage bills and just to keep our heads above water. Here are some sectors particularly hard hit in Spain, who need to borrow money to just survive:

  • Service providers such as the pool man, plumbers, lawn care providers, small builders, construction companies, painters etc. Anyone who provides a non-tangible service in exchange for payment runs the risk of running into cash flow problems in Spain.
  • Landlords and property owners: we have clients who have non-paying tenants in the form of hairdressers, bar owners and of course residential clients too. You can’t get blood from a stone though, so if a beautician or retail outlet is closed due to restrictions, the landlord is not getting paid, but the bank does want their payment every month.
  • Retail stores. Retail has enough issues to deal with apart from the Coronavirus. They run the risk of not getting paid whenever credit card fraud occurs, online competitors, they suffer theft, the risk of products going out of date, and now- Covid on top of an already tough business.
  • Small builders. Wow, what a hit they have taken in Spain over the past 18 months. We have builders speaking to us who had started a job, needed to close due to lockdown and now can’t get any materials. They have deadlines to meet and altogether find themselves in a terrible situation. I know of builders who literally have millions of euros in profits waiting for them, as soon as they can get a few hundred thousand in liquid cash to finish small developments. I can only imagine what it is like for those developers with hundreds of homes under construction.
  • Anyone who offers terms to their clients, especially large ticket items like boats and cars, sell to their clients by extending credit. The buyers often require lengthier repayment terms. What if that buyer is in need of cash themselves, they will pay, they just can’t do it right now? The longer you go from the purchase point, the less likely the supplier of the product is to get paid.
  • Tourist business: bars, restaurants, golf clubs, taxi services, property management companies and more all rely on tourists, the missing link this summer in Spain. What if you own the top Irish bar in Spain, but you’ve got no customers? What do you do? Who do you turn to? Can you afford your mortgage- a monthly amount that normally you barely notice, now is a weight around your neck!

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