Rising costs remain a threat to small businesses, with a significant number still in fear of having to shut up shop because of larger and larger bills. In the face of this pressure, how can these firms protect their cashflow?

According to a new survey from Wise, almost 70% of small and medium-sized businesses are worried that rising costs could force them to close, with almost 90% claiming that they can do little more to reduce overheads as they battle the squeeze on their bottom lines.

While increasing business energy costs have recently made the headlines, with these bills expected to continue to rise into 2025, this is just the tip of the iceberg. The research also cites costs relating to materials, staff wages, supply chains, bank fees and overseas shipping as contributing to increased pressure on cashflow.

In addition to these costs, there are also those relating to digital transformation, sustainability-led development and the need for enhanced cyber-security, not to mention those linked to the perennial problem of late payment.

Impact of rising costs on cashflow and how alternative lenders can help

While there is much talk of economic upturn, concern over rising costs among small businesses is far from surprising, not least because the pace of recovery is proving slow. The economy may have come out of a shallow recession, but growth remains very low, with the Bank of England revising down its prediction for the third quarter, to 0.3%.

As such, market conditions remain highly challenging for small firms. Relentlessly large bills are only adding to the burden. How business ease the pressure on cashflow? 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 the current funding climate (with 65% more SMEs experiencing difficulty in accessing finance from high-street banks). 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.

This profile has helped cement the reputation of alternative finance in the business sector. Notably, the new Growth Guarantee Scheme will provide a wide range of finance facilities to smaller firms, including asset finance, invoice finance and asset-based lending. This is further proof that alternative lenders are increasing filling the small business funding gap.

Small business finance options for managing increased costs

The new figures on the impact of rising costs on small businesses are a timely reminder that this is a problem that very much still exists and one that still poses a threat to the sector. And it’s not just energy bills, but a range costs across key areas.

But firms have to find a way, and notably with bank fees among the costs putting pressure on finances, it is important that businesses 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 Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.