Supply chain delays are still plaguing millions of small businesses, affecting bottom lines, cashflow and growth plans. How can under-pressure firms manage the costs?

The disruption to supply chains has been a thorn in the side of small businesses for some time now, a legacy of Brexit, Covid-19 and the war in the Ukraine. And with firms facing unprecedented headwinds in 2023, the impact of delays is being felt more acutely than ever.

According to the new SME Growth Index from Aldermore, over three million SMEs have been affected by supply chain delays in the past 12 months, costing them on average an eye-opening £625,000 in lost income.

This drag on performance is affecting the role out of existing projects and the signing of new deals, as well as putting extra burden on capital resources and liquidity. Businesses reliant on materials have been the hardest hit.

Supply chain shocks and how alternative finance help

SMEs are proving remarkably resilient to supply chain delay shocks, quickly learning lessons in recent years and reorganising supply chains, stock strategies and customer lead times, but this is proving an ongoing process and there are still many firms that need to put contingency plans in place to protect against future disruption.

And, of course, reorganisation and planning comes at a cost, which is far from straightforward to manage at a time when higher prices and rising interest rates are restricting flexibility and spending power. Nevertheless, firms have to find away to cope and this is where alternative finance can help.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in a funding climate characterised by prolonged caution from traditional lenders. Indeed, the issue has returned amid highly challenging post-Covid-19 market conditions, with bank loans to SMEs falling by £14 billion in the year to March 2023.

These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth. Notably, alternative lending played a prominent role in the government’s headline emergency support schemes.

This profile has helped cement the reputation of alternative finance in the business sector, with a recent study showing that more than 50% of small businesses are looking to use finance to achieve growth in 2023.

Supply chain management and SME finance options

Supply chain shocks are far from being a thing of the past, as the latest data from Aldermore suggests, and they continue to put SME liquidity and growth at risk. Firms have to find a way to manage the costs of delays and this is why it is vital owners and directors are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.