Like many households, businesses are under pressure from rising costs, and just as rising fuel, energy and inflation are eating away at many of our pockets at home, local businesses are suffering from a wave of financial difficulties.
The ultimate challenge many face is the ability to sustain and absorb rising operational costs, without passing them on to their customers and risking losing business.
Inflation has reached a 40-year high of 9.1% and could rise further, and for many businesses rising product or material costs, operating expenses and the pressure to meet the increases to support employees force many of them to raise their prices, or risk negotiating negatively.
The issue has recently made headlines with Heinz Craft and Mars refusing to supply their products to Tesco after the retail giant refused to ‘pass on unjustifiable price increases’. It’s a difficult situation, with manufacturers arguably unable to bear rising costs any longer, and customers equally reluctant and unable to afford a spike in retail prices.
In a recent UK Chambers of Commerce survey, a record number of businesses say they intend to pass on rising energy and raw material costs to their customers. More worryingly for the future, with sales and confidence weakening, three in four companies surveyed also said they were not planning to increase their investments and more than a quarter expected their profits to fall. . While the immediate pressure on business is evident, the long-term effects of a lack of investment bode well for the future of UK trade and industry.
Although the outlook looks bleak, things are changing and there is no doubt that enterprising companies will weather this storm, as they have done before in difficult business conditions. The main tool a company can use to maintain a steady cash flow and protect its reserves is to use corporate finance.
Lending products such as bill discounting which releases cash against money owed by customers, prior to payment, and merchant cash advance, which provides a lump sum on future card transactions, are quick ways to alleviate immediate pressures on cash flow. Many manufacturing companies are unaware that specialized equipment or machinery is eligible for asset financing, which could free up valuable funds in a business.
By acting now, before the pressures mount, businesses in our region can plan a way to navigate these difficult business conditions and ensure they are in a better position for the months ahead. It is always, without exception, far better to plan ahead as there will be more options available that provide choice and a thoughtful way forward, rather than waiting until it is too late.
My simple message to local businesses is don’t struggle in silence – we understand the pressure many business owners are under and are here to help with practical advice and solutions, so don’t hesitate to contact us.
For more information contact Karl Lanham at CCF on 01553 611619 or visit ccf.finance