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How to manage the costs of auto enrolment

While SME confidence is on the rise, the fragility of this optimism has been underlined by new reports stating that small businesses face huge fines for missing auto enrolment deadlines. Alternative finance has a key role to play in managing those costs.

According to new research from payroll software firm Paycircle, small and micro businesses in the UK could be hit with fines of up to £25 million for failing to meet pension auto enrolment requirements. The demands associated with setting up workplace pension schemes are among a number of significant headwinds being faced by SMEs in 2016. Others include the impact of the National Living Wage, the Apprenticeship Levy and the uncertainty surrounding EU membership.

In short, there is notable pressure on capital and cashflow. Data from The Pensions Regulator illustrate the extent of the problem. According to the Regulator, over 2,000 SMEs have missed deadlines since 2012, each one incurring a fine of £400. If that rate of non-compliance continues to 2018, the amount of fines issued will reach the figure put forward by Paycircle.

So how do SMEs battle these headwinds and manage the cost of auto enrolment? One step that they should be taking is the integration of alternative finance into their financial strategies. Whether used alone or in conjunction with traditional lending facilities, services such as invoice finance, peer-to-peer lending and crowdfunding offer the accessibility, flexibility and affordability that small businesses need to survive in today’s marketplace.

While traditional lenders are slowly stepping away from the cautiousness that has defined their lending practices in recent years – HSBC has launched a £850-million lending fund for SMEs in Sussex, Hampshire and Surrey for example – the SME finance landscape has changed and alternative finance is now a key source of finance that more and more SMEs are using to keep their finances on track.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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