Financial Help for SMEs. What’s Available to Them Right Now?

If you’re like most small and medium-sized businesses (SMEs), you’re feeling the squeeze from the rising cost of living increases. The help from the government is thin on the ground and virtually non-existent, so it’s time to take a hard look at your business and build out a workable budget to reflect the current economic challenges. Overlaying your cash flow analysis onto your budget will also help you get a clear picture of where your money is going – and where you need to make changes.

Inflation is through the roof and the Government isn’t doing much to help.

Since the beginning of 2020, inflation costs and the cost of living in the UK have skyrocketed to all-time highs. This substantial increase has wreaked havoc on the country’s SMEs, which account for 99% of the UK’s business population. SMEs are being hit especially hard, as they don’t have the capacity to absorb these unexpected financial shocks.

Unfortunately, not only are they being forced to contend with this ever-growing financial pressure, but it also appears that their strife is going largely unnoticed by the UK Government. Whilst there seem to be various local council grants available to SMEs (which can have regional or other specific limitations) the Government still hasn’t addressed the need for a UK wide scheme offering help for all SMEs.

The Government has even suggested that SMEs lower their prices to help consumers affected by the cost of living increases.  But where does this leave the SMEs who are also trying to deal with and absorb the cost of living increases that are affecting their businesses too?

SMEs are still waiting for proper support systems to be put in place by the Government and sadly until these support systems get enacted or there is some other action from the Government, it’s unlikely that this situation will improve anytime soon.

It’s time to take a hard look at your business finances.

When it comes to managing your business finances, taking a hard and realistic look is key. Having a solid budget in place that works for you and your business can be invaluable to ensure that you are making strategic decisions to reach your goals. Building an effective budget means having the data on hand you need about your expenses, investments, and projected income streams. Start by gathering all the financial information on hand: past budgets, statements, invoices, contracts etc.

Then take some time to look at your business performance objectively, and identify what’s working as well as areas where there is room for improvement. With this data, you can then determine how much you will need to invest in each budget category while also considering future growth potential and any external factors that may influence the market condition. Don’t forget a contingency plan should things not go as planned!

Taking stock of your business finances and building a budget is an essential part of keeping your business afloat. Managing your finances can be overwhelming and it’s easy to overspend without realising it but building a working budget can help you stay on track with your expenses and investments.

Overlay your cash flow analysis onto your budget to make sure you’re on track.

Having a business budget in place is essential for understanding where you’re looking to go financially. But it isn’t enough; if you want to make sure that your cash flow is on track and your profits are increasing, overlaying a cash flow analysis on top of the budget is highly recommended.

This will help to provide an accurate assessment of both the timing of expected sources of income and outgoings associated with running your business, ensuring that these are balanced throughout the year – keeping ahead of this can potentially even give you some extra money to put back into the business through reinvestment or any other need associated with running a successful enterprise.

Work with your advisors and accountant for support.

Navigating financial matters can be daunting. If you ever find yourself in need of help, it’s important to have trusted advisors you can go to. Working with your bank used to be the go-to and provided a valuable resource but finding a Bank Manager able to assist you is becoming harder to find, you may find your accountant or an independent commercial finance broker is now filling in the space. However, the Bank remain an important source of funding and its financial suite of products should be considered.

Additionally, never underestimate the value of other financial support options such as invoice finance. Entering into an invoice finance agreement will provide access to your capital when you need it most.

What is invoice finance and how does it work?

Invoice finance is a type of business financing that allows you to access capital in advance of receiving payment for invoices. It works by providing a funding facility based on the value of your unpaid invoices, meaning you can receive an immediate lump sum payment against an invoice when it is issued.

The facility resolves, usually being repaid in full when the invoice is paid, with this funding replaced by fresh invoices and drawdown of funds, and so the cycle continues. Invoice finance can provide an invaluable lifeline to SMEs who are struggling with cash flow issues due to late or delayed payments from customers, and increased overheads and costs due to the constantly rising costs of living.  It’s also a unique type of funding directly linked to the sales of a business, so it keeps pace with the working capital needs of a growing SME.

Invoice finance also offers a range of other benefits including the provider managing every aspect of a business’s credit control. This can be invaluable for businesses that do not have the resources to manage their own credit control function or have had issues emotionally when dealing with chasing for money owed. Outsourcing the credit control function also frees up valuable time for the business owner to focus on generating more sales.

To take advantage of these beneficial services and find out which invoice finance option is best suited for your business needs, contact Partnership Invoice Finance for more information and guidance. Our team of qualified professionals will be more than happy to provide you with the necessary assistance and advice.