A contribution from Alvaro Dexeus, Managing Director Southern Europe at Pleo
Although the quest for innovation excellence continues, many challenges persist to improve competitiveness in Europe. This year, the European Innovation Scoreboard ranks France 15th in the “strong innovator” category. However, despite progress on certain key indicators, the country faces several obstacles such as the decline in investments in innovation outside R&D and the lack of training in ICT (information and communication technologies). These obstacles limit the innovation potential of French companies and hamper their ability to remain competitive on the European scene.
But how can we invest in innovation when financial pressure reduces the capacity for action? Cash flow management is not only a question of financial balance, it is also crucial for the development of the company. And for many of them, this question is becoming more and more urgent.
Financial pressure still present
Cash flow difficulties have already limited 38% of French organizations in their investments which would have enabled growth opportunities or new projects*. This obstacle penalizes companies; yet this was not always the case.
The current situation makes this topic more relevant than ever. Weakened by the economic and political turmoil of recent years, linked to factors such as the pandemic and rising inflation, many organizations fear a new recession and are in a constant state of preparation and resilience. As for business leaders, they often feel trapped in a vicious circle. They want to innovate, invest in new projects and continue to develop. However, they constantly lack resources, limiting themselves to meeting their basic needs. Rather than looking ahead to the future, they find themselves having to make short-term decisions to stay afloat.
Cash flow, a central issue for French companies
Today, we observe that 31% of French organizations say they have to face regular cash flow problems and 54.2% of French financial decision-makers consider cash flow management as one of their top 3 priorities in 2024. It is not These are not minor concerns; Cash flow difficulties can jeopardize a company’s competitiveness, preventing it from seizing new opportunities or overcoming unforeseen challenges. The observation is clear: without sufficient liquidity, they not only stagnate, they risk going under.
Additionally, nearly 44% of organizations say they would need more financial support to better manage cash flow gaps. High interest rates, lengthy approval times and strict repayment terms make traditional financing a mirage. These challenges slow them down and prevent them from growing in a constantly evolving market.
A cash flow crisis can destabilize even the most promising businesses. When they constantly have to manage financial emergencies, they lose the ability to plan ahead and make bold strategic decisions that give them a competitive advantage and promote sustainable growth.
Financial flexibility, key to the survival and growth of SMEs
The French commercial landscape is evolving rapidly and financial flexibility is emerging as a key factor for long-term success. It is crucial to have the freedom to seize opportunities without fear of debt. Whether exploring new markets, investing in technologies that automate repetitive tasks like expense management tools, or dealing with unexpected costs, companies need to be able to act quickly and decisively.
With 159,000 SMEs (excluding micro businesses) generating nearly 23% of the added value of all businesses, SMEs represent an important challenge for the French economy. The country’s development relies on the courage and innovation of these organizations. The future of the business landscape depends on these structures being able to benefit from the financial flexibility necessary to adapt, grow and prosper. Solving cash flow problems is urgent; without solutions, the risk is to paralyze the companies that boost our economy. Supporting these organizations also means ensuring the future of the French economy.
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