Cashflow problems hitting community pharmacies in England have become so severe that some pharmacies are being forced out of business, C+D has learned.

Financial advisers reported seeing clients going into administration "for the first time in 20 years of providing services to pharmacy", and cited "cash management" as a key issue in many failed pharmacies.

Experts said the problems were now "a reality" for many pharmacies, and warned the situation was likely to worsen.

Cashflow problems potentially caused by "inconsistent payments" from NHS Prescription Services had led to one pharmacy going into administration this year, said Umesh Modi, accountant and partner at Silver Levene. "I am getting more and more clients saying they are experiencing cashflow difficulties as margins go down and costs are increasing. This is a recipe for more companies going into administration," he said. And Mr Modi had a stark warning for the sector: "Frankly, I am very concerned about the survival of many of the small pharmacies."

Lindsay Pharmacy in Littlehampton, West Sussex is also up for sale as a going concern after going into administration following "severe cashflow difficulties", said joint administrator and partner at legal specialists White Maund LLP Chris Latos. An in-depth investigation into the cause of the business's problem has not yet been completed, but cashflow management was a common problem for failed pharmacy businesses, Mr Latos explained.

"I have dealt with a number of failed retail pharmacies over the past 15 years and the common issues are cash management and non-core activities being a drain on the business," said Mr Latos. "Over recent years the impact of doctors' surgeries moving to new premises with an on-site pharmacy has impacted on the viability of local competitors. I would also note that a number of the pharmacies I have dealt with have had consulting rooms but seem to use them for storage rather than additional services," he told C+D.

Avicenna CEO Salim Jetha blamed the situation on the "financial squeeze" pharmacists were facing, and Fin McCaul, chair of the Independent Pharmacy Federation, said the news was "disappointing", but that it was "the reality of the current financial climate". "The contract doesn't pay enough to run a pharmacy… and it's only going to get worse, not better," he warned.

Numark reported that it wasn't aware of any members who had gone into administration.