With fuel prices soaring as a result of the war in Ukraine, businesses reliant on fuel are starting to feel the pinch as operating costs rise. How can smaller firms manage the impact on cashflow and keep the show on the road?

As a result of the Russian invasion of Ukraine and the ban on Russian energy exports imposed by western countries, the wholesale price of oil is close to record levels and this is sending the price of fuel through the roof.

All types of businesses are starting to see the impact of this increase, in particular those that operate fleets or are vehicle based. As cashflow starts to be affected and profits begin to be eroded, smaller firms are particularly vulnerable.

Recovery at risk and a call for government assistance

Fuel prices were already climbing prior to the outbreak of war, against the backdrop of rising energy costs, and the recent surge in pricing is starting to hit smaller firms. The hard-fought gains made after two-year of pandemic-stricken trading are under threat, with rising costs putting a clamp on investment and growth and causing discussion of forced redundancies.

As such, calls are growing for the government to act to help small businesses manage the impact of rising fuel prices, with companies and groups lobbying for action. Whether this help is provided, potentially in the form of direct subsidies or the postponement of new taxes, remains to be seen.

Regardless of any state assistance, small firms need to find a solution and balance the books. Accessing to small business finance is critical and alternative lenders can help.

Managing the impact on profits and alternative finance 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.

Rising fuel prices and small firm finance options

Rising fuel prices are a serious threat to small businesses, with the likelihood growing that profits will be severely affected. To help manage the impact of soaring prices on cashflow and maintain forward momentum, it is important that these business are aware of all the small firm finance options available, including the services of alternative lenders.

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