How small businesses can manage spiralling costs

posted by 3 years ago in Guest Blog

Bret Jackson from Finance4Business explores the funding streams available to small business owners.

As we plough on through February, it is safe to say it has certainly been the busiest start to a year I can remember. Both from a marketing and business perspective, which is reciprocal with all I speak to within the industry. It’s also that productive busy, not the type where you are flat out and you reflect on it and go “what have I achieved?”

Everyone I know that was doing dry January failed and 7 weeks into this year, I am pretty sure all those gym memberships are not getting the use they once were, when people signed up for them on the 2nd of January. Things like these are done with all best intentions, but fail either because they are unrealistic or poorly planned.

This got me thinking about it in a business sense. How and why costs are affecting businesses and what solutions are in place?

 Why are costs spiralling?

This is more sector dependent than in general. The falling pound has benefited exporters, but for importers has caused issues. Diageo is on fire due to locally sourced supply and the international market that it has. This is a complete contrast to that of the high end retail sector. While the corporate behemoths of this world can often bear the brunt of this, it is no joy for the smaller businesses, which do rely on imports.

Inflation is approaching the government’s target of 2%, currently 1.8%. This has an impact of costs to businesses as well as personal living, especially as salary’s have remained constant with no real increase.

Interestingly, the cost of borrowing is still relatively high, given such a low base for the not financially strong companies. Banks are prepared to lend low, but covenants must be good.

 How can Invoice Finance Assist?

Invoice Finance will play its part in funding the growth of invoiced goods/services, although, at its best when part of a suite of facilities that help cover any cash strain on supply side/pre-invoice cost. These facilities include purchase order finance, online term loan, p2p and bank term loans.

The range of invoice finance suppliers has grown in recent years. Gone are the days that invoice financing and factoring are the last resort. Like other elements of the Alternative Finance sector, invoice financing has evolved greatly.

With new providers coming to market brings new innovative solutions, each having its own house style. With more competition, there is more flexibility and the appetite to do deals becomes increasingly stronger. Single invoice/use only when needed finance, supplier finance platforms with no security required and unsecured term loans are just some of these enhancements.

Now, there is a downside to all this new competition. It becomes very confusing for the user/business owner. This is particularly the case with the smaller businesses, who do not have the time to explore the market and obtaining the best deal for them. Business users are increasingly savvy as to terms and the use of such products, but can’t afford to make a mistake in selecting the right provider.

Partnering with a Specialist

I have already touched on the increased competition and the array of new products that are in the market, which can be very confusing. So why not let someone do this work for you?

Utilising a specialist finance group can assist in understanding your business, guiding you through the minefield of options that are available.

A specialist broker can tailor bespoke packages for your business. Invoice Financing is only one option and may not be the full solution. By evaluating your business funding requirements, we have access to the following:

  • Bridging loans
  • Peer 2 Peer financing
  • Unsecured business loans
  • Business banking facilities

As your business grows, so will the need for funding. By having your specialist partner, we can review and assist in this continual growth. You concentrate on getting the business in, we will concentrate on supporting it.