This overconfidence score reflects a significant gap between the perception and reality of cash flow control among owners, which the Compass determined through specific questions that assess profitability, runway, missed payments, and other factors. Outlined in Relay’s new Cash Flow Compass report, the survey also unearths the impact of this overconfidence. While most business owners believe their cash flow control is strong, the Compass reveals that 62% admit cash flow issues have had negative effects on their business in the past year, such as missed growth opportunities, delayed projects, or reduced staff hours.

The Cash Flow Compass explores the survey findings with expert commentary from small business advisors and other business leaders, including Mike Michalowicz, serial entrepreneur and Creator and Author of Wall Street Journal bestseller, Profit First. 

“Having a realistic grasp on your cash flow is crucial for any small business,” said Michalowicz. “Relay's report reveals business owners are overconfident and that can lead to risky decision-making. The fastest way to get a better understanding of your cash flow is to organise your money with accounts based on the purpose of those dollars. Why? Because your bank account is where you'll go to understand if you have enough money for your next expense,” he says. Michalowicz selected Relay as the official banking partner of Profit First for its ability to create multiple, individual no-fee accounts.

Relay’s Cash Flow Compass combines new data on small business cash flow, actionable expert advice, and a first-of-its-kind cash flow quiz for SMBs to measure their own cash flow control. Key findings include:

• Cash flow issues are common: 91% of business owners and managers have cash flow issues. The top three causes are rising labour costs, seasonal fluctuations in business, and late payments from clients.
• Owners check their bank balance daily but are missing the full picture: A whopping 95% of small business owners make financial decisions based on their bank balance alone. Only 24% are organising their income across different accounts, which offers a more granular view. 
• Almost a third of businesses have missed big payments in the last year: According to the report, almost a third (31%) of US SMBs have missed or been late to pay major expenses, like their own salary, supplier bills, and rent.
• Cash flow problems can kill progress: The Cash Flow Compass identified that the top two negative results of cash flow issues include, missing out on growth opportunities and delayed/cancelled projects. 
• It’s personal: cash flow struggles take a real toll on business owners. More than two thirds of small business owners (71%) say cash flow issues have had a negative impact on them personally. For example, causing stress and anxiety, burnout, and lack of sleep.

Today, +33 million small businesses employ +62 million people, and contribute nearly 44% of the country’s GDP. As US markets face volatility and small businesses grapple with changing interest rates and a tight labour market, it has never been more critical for owners to have a clear view and total control of their cash flow.

“When small business owners are in control of their cash flow, they can explore growth opportunities and square off against economic curveballs. Cash flow clarity also means owners can sleep better and can reduce their stress, which is important to the success of any business," said Yoseph West, Co-Founder and CEO of Relay. "There is a powerful optimism at the heart of every small business, but sometimes that optimism can skew a business owners’ perception of their cash flow control, and that shows up in the Compass. Fortunately, business banking solutions like Relay offer owners a more practical and detailed view of their cash flow, so that they always have their pulse on the money," said West.

Business owners can check out the Cash Flow Compass to take a powerful quiz that measures your own cash flow control, and to download the full report featuring more survey findings and expert tips to unlock cash flow clarity.