We know that SMBs have been facing an extremely challenging time over the past few years. Obstacles include Brexit, the COVID-19 pandemic, and the ensuing supply chain crises. In this blog, AP spoke with CEO, Ian Duffy as we discuss the global impact of how these crises are hitting SMBs and how companies around the world can manage liquidity and prepare to cope over the coming years.
With inflation rising to its highest level in 30 years, alongside weak growth, the UK is set for stagflation. Stagflation is when an economy experiences a period of high inflation and low economic growth. Some predict that the country is heading towards a repeat of 1970s stagflation. Predicting a recession to occur before next year.
For SMEs, critical challenges at the moment are the labour shortages that have been triggered by Brexit and Covid. In particular, the agricultural and transport sectors, where truck drivers remain in high demand.
Although UK unemployment is currently low, the workforce has shrunk since the pandemic, with many workers choosing to change paths. This means businesses are being forced to grant higher wages for the skilled staff, otherwise these businesses cannot operate. This increases prices, which puts further pressure on global supply chains.
Since demand is already high in those supply chains, there is an upwards trend of higher average prices.
Across the pond, the US could be heading for a recession amidst rising interest rates and high inflation. This presents a number of challenges for SMBs, including a likely decrease in sales and therefore profits.
During a recession, companies are less likely to invest in new products. As a result, they are often forced to lay off employees to reduce their overheads. As lenders such as banks tend to become more risk-averse, it can be more challenging for businesses to access the credit they need to survive.
Generally, there tends to be less cash flow, as suppliers and customers find it harder to make payments on time during a recession. This can be particularly challenging for B2B businesses. This is because if a client or customer does not survive the recession, those bills might remain unpaid.
There is also likely to be a reduction in product quality as companies try to reduce costs. This can have knock-on effects for manufacturers and producers.
How can growing businesses manage liquidity?
While these conditions are undoubtedly arduous for businesses, some companies see the challenge as an opportunity to become more competitive, creative and innovative than they might be in less volatile times.
This can include investing in new product lines, exporting to new international markets, and bringing on staff to execute experimental initiatives that previously might have been deemed too risky or unrelated to business as usual.
SMBs can investigate some of the new solutions available to help them to grow their business without having to jump through the hoops presented by traditional credit facilities.
At Accelerated Payments, we help SMBs get advances on cash they are due from specific individual receivables.
We work flexibly with your company – you can choose how many and which receivables you want to finance and when. This gives easy access to funds without incurring fees on every receivable or having to finance an ongoing credit line. It’s a model that works remarkably effectively for SMBs that might be providing services for industry giants or who is trading domestically and looking to explore new markets to grow their business.
How does it work?
Receivables Finance from AP means you choose which receivables to fund and when. It’s a hassle-free way to accelerate the payments you are waiting for. No personal guarantees or additional security are needed – we approve your debtor or buyer and credit insure their payments.
For businesses venturing into international markets, we also offer Export Finance. This helps to release working capital from overseas transactions. There is no restriction on the level of foreign sales – you choose which receivables to fund and when with multiple currencies supported.
During difficult business periods, speed can make all the difference in helping businesses navigate these challenging times. We make fast decisions and keep the process as simple as possible.
All in all, we see it as our role to give much-needed working capital to our new and existing client base so they can deal with the crises to come. In times like these, resources become even more crucial to weathering the storm.