The recent shortage of financial resources has raised new interest in the impact that financial constraints have on firms, apparently a key factor that shapes their dynamics. Despite much has been said with respect to the manufacturing sector, there is a lack of research on the services sector. This paper, by testing the importance of financial distress between sectors and industries, greatly contributes to a better understanding of both the heterogeneity of services industries and the role of financial constraints upon firm dynamics. For that purpose, we resort to the estimation of sensitivities of cash holdings to cash-flow upon a large unbalanced panel of Portuguese manufacturing and services firms. Our results clearly show that: (a) firms in Portugal are generally financially distressed; (b) services firms are more financially constrained than manufacturing firms; (c) differences on the severity of financial constraints are larger within than between services and manufacturing sectors; (d) by firms' characteristics, the patterns of constraints observed for services are distinct from those of manufacturing and the overall sample.