Alex Beardsley, joint managing director at ABL Business, shares her advice for businesses looking for finance – and how speaking to a commercial finance consultant can stop a short-term finance solution from creating a long-term problem.
As the economy seemingly moves further towards a recession and the level of market uncertainty keeps even the hardiest of business owners awake at night, those of us running SMEs are really starting to worry.
There are several factors outside of our control that have the potential to make our costs spiral, and the constant political U-turns, increasing interest rates, and hikes in the cost of raw materials continue to make for a very uncomfortable ride.
Many businesses have, sensibly, hedged their energy, and ensured there are clauses in contracts to allow for negotiations with key customers should such economic conditions mean they need to. This means some of the costs outlined above can be passed onto customers, to slightly lessen the impact of the blows it feels like – right now – we’re constantly being dealt.
A very real battle
However, there are still many SMEs that are fighting the very real battle of paying increasing costs with little or no way of recouping these through their customers. Lots of these businesses – which form the backbone of our economy – seriously need working capital to plug cashflow gaps; and they need it now.
But the need for quick cash is leaving businesses vulnerable, and there are some key pieces of advice to stop them creating a serious long-term problem by using the wrong short-term finance solution -the first of which is to start planning for a shortfall, now.
Even where a business has enough cash reserves and has a robust forecast in place, it’s prudent to take just a brief look at what finance options could be used to provide that all-important cushion in case of a cash flow gap. Doing this preliminary research to have on their radar what is available could be the best thing a business owner or finance director does this year.
So far this month (October), the commercial finance market has seen a reduction in the number of fixed rate commercial mortgage options, followed by several lenders pulling out of the market, and one “Neo Bank” closing their doors altogether.
No fault of their own
This could mean many businesses find themselves in a situation where they are asked to move away from their facilities; not because the business itself is in distress or defaulting, but purely because they are breaking the covenants imposed by the lenders as part of their new ‘stress’ testing models. Yet again, a rise in interest rates, increasing energy costs, and a review of the lender’s portfolio all combine to create an outcome that causes another headache for SME business and leaves owners, founders and entrepreneurs scratching their heads as to why they are in this position through no fault of their own.
Businesses will always need access to finance, but in times of such severe uncertainty, how they access it will make all the difference to how they weather this long-term economic storm. Now more than ever, they need an independent view of the market to make informed choices. They need informed advice – from a real person - on the pros and cons of every product, and they need to be able to access lenders across the market to get them what they need, when they need it.
Why you should speak to ABL if you need commercial finance right now:
• You will speak to real people. We don’t do faceless at ABL
• We start with an outcome focused approach – not a product focused one
• We give businesses and advisors an independent view of the market to make informed choices
• Our independence means we advise on the pros and cons of every product, avoiding businesses choosing a short-term answer they might regret in the long run
• Our independence gives businesses access to lenders across the market, to get them what they need, when they need it
• We don't condescend or confuse. We get stuck in and get the job done!
This is an uncertain time, but remember - in times of uncertainty, the best thing is to turn to the experts.
If you want to know more, we are always happy to help, the ABL team is available on 01274 965356 or drop us an email
If you want to find out further information about this topic you can get in touch with Alex via email or call her on 07903 769 037 to talk through your options.