While disruption to the supply chain seems to be easing as 2022 gets going, the impact on prices and cash flow remains. With another challenging year ahead, how can small businesses manage this pressure?

The supply chain crisis was a defining feature of 2021 for small businesses and while there are signs that the worst may be over, problems are widely forecast to continue as the global infrastructure takes its time to readjust and recover.

The impact on small businesses has been widespread, with over three quarters of these firms having to deal with increased prices. The manufacturing sector has been particularly hard hit, with financial performance affected as a result.

Better access to funding key to managing supply chain crisis

Notably, in the wake of a tough 2021, the SME manufacturing sector has called on the government for better funding access, linking such improvement to the ability to increase productivity and fulfil growth potential.

This access to funding will be critical in the months ahead as manufacturing companies and the SME sector as a whole looks to boost trade and target concrete growth as they battle serious headwinds, including higher raw material prices and rising inflation.

So, how can small businesses manage the impact on cash flow and be ready to invest where and when necessary? Alternative finance can help.

Supply chain costs and how alternative finance can help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic, services such as invoice finance, asset finance and peer-to-peer lending, are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Furthermore, alternative lending is playing a prominent role in the government’s headline emergency support scheme, the Recovery Loan Scheme (open until the end of June 2022). Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

Cash flow management and SME finance options

News that the supply chain crisis may be easing is welcome, but costs remain elevated and pressure remains on small firms. To manage the impact and safeguard cash flow, it is important that owners are aware of all the finance options available, from traditional lenders and government emergency support schemes to alternative finance facilities.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.