Another week, another tax. Not quite, but small firms can be excused for thinking so. While the Extended Producer Responsibility scheme hasn’t grabbed the headlines, it does mean another bill for many small firms. How can they pay and safeguard cashflow?

The Extended Producer Responsibility scheme came into effect at the beginning of April and makes producers responsible for the full lifecycle of their packaging waste. The shift is significant, with local councils previously in charge of waste management. According to the Grocer, around 8,000 businesses will be affected, with these firms having to manage combined annual costs of as much as £1.8 billion.

On the face of it, making producers responsible for their packaging waste hardly seems controversial – and increasing recycling rates and reducing waste is a positive goal – but the timing of the move and its execution have attracted criticism. The first bills for packaging waste management are due in October.

A principal criticism aimed at the new scheme is that it takes a one-size-fits-all approach – it seems to be designed for large companies (better equipped to deal with the extra costs) and as a result ill-suited to smaller firms, which don’t have the same resources. There have also been complaints about the communication of the introduction of the scheme and that there has been little warning of the extra requirements and costs.

With regard to small businesses, the new tax undoubtedly comes at a bad time. The pressure on already thin margins has been further ramped up in recent months, largely as a result of the increase in employer national insurance contributions. As such, it’s not surprising that the prospect of yet another bill has been so poorly received and that the Grocer is warning that it could send hundreds of small firms into oblivion.

Paying packaging waste bills and how alternative finance can help

Another tax is the last thing small businesses need, but the environmental benefits of the Extended Producer Responsibility scheme seem clear, and it’s hard to find the controversy in taking responsibility for your own packaging waste.

So, in a climate where spending power remains weak and the economic outlook highly uncertain, how can small firms manage the extra costs of packaging waste management while safeguarding cashflow?

This is where alternative finance can help.

Small business lending from traditional sources remains subdued into Q2, with 65% more SMEs experiencing difficulty in accessing finance from high-street banks. As a result, alternative lenders have become increasingly embedded in the small business finance landscape.

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. 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, the Growth Guarantee Scheme is providing 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 firm finance options for managing packaging waste costs

It remains to be seen if the Extended Producer Responsibility scheme is redrawn before the first bills are issued to better reflect the financial impact on small businesses. As such, it is important that these firms are in a position to manage any extra costs relating to packaging waste.

Against this backdrop, as they continue to strive to safeguard cashflow and find capital for investment, it is vital that key decision-makers 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.