2022 takes its toll on UK businesses

With a leaner Christmas than usual approaching, the cost-of-living crisis is being harshly felt in almost every sector across the UK. Higher inflation and a squeeze on margins mean the economic decline is having an unwelcome impact on businesses – many of which are still struggling with the financial impact of the pandemic.

From the rising costs of running a company combined with a downturn in consumer confidence, businesses up and down the country have a lot to contend with in order to manage their day-to-day finances and remain competitive. According to Google, searches for “business cash low problems” have soared to up to +120% YoY.

Searches for “cashflow problems solutions” and “cashflow issues” up +136% and +80% respectively

Here are the top 10 “cash low problem” related searches seeing YoY increases (according to Google Ads Keyword Planner) –

Judging by this surge of concern, it’s time for businesses to take action to reduce spend and run their company in the smartest way possible – and experts should be leading the way. In need of a few pointers on how to navigate your business through this financial storm? John Atkinson, Head of Commercial Business at Novuna Business CashFlow has shared his top 6 tips on how best to tackle your business’s cash low:

Reduce risks

“Though client relationships are always a top priority for every well-run business, it’s absolutely vital to work with the right clientele and reduce any risks of monetary loss or bad communication.

Prior to getting into business with someone, you should always check their eligibility – simply get in touch with a credit report company and flag down any potential problems before they become your problems. No matter how much you get on with a client, we would advise basing your business decisions on reliability.”

Digitise your invoices

“There are multiple factors that can contribute to cash low problems – but untimely or unpaid invoices can really set you back, and fast. If you’re a larger company with a sizable payroll and multiple outgoings, you should anticipate client payment complications, which is why it’s so important to prepare for them. Planning your financial recovery process could really help you in the long run.

Make sure that your invoices are issued as soon as possible, are clear and easily understandable, and contain all the correct information. Doing this digitally by email or another platform will help ensure that your invoices are uniform and automatically on time. Invoice Generator from Novuna provides an efficient way for SMEs to digitally issue invoices, minimising manual handling and common data entry mistakes as well as keeping all information securely in one central place.

Offer an incentive

“Everyone knows that, in any context, a little motivation brings better results – so why not motivate your clients to pay more promptly? Introducing an incentive to pay your invoices on time is sure to encourage your clients not to miss deadlines. You could start by offering an affordable discount when payments are made on time.

Rather than being out of pocket, these discounts usually pay for themselves as they remove the risk of unexpected debt and unexpected cashflow problems. We’d also suggest adding an interest charge for delayed payments, too.”

Make use of your assets

“For any business, there are investments, sometimes on the larger side, that have to be made. From buying properties or office spaces to purchasing equipment that can enhance your offering, pricey business investments can really impact your funds. So, if you have a number of valuable assets at your disposal, then why not make some of that capital back?

You could investigate leasing out your property, loaning out your company car, or renting out valuable equipment and putting some cash back into your business account.

Another good option is to look at using your unpaid invoices as collateral by releasing money from these by using an invoice finance provider. This is usually a much quicker way of releasing funds than waiting for your customers to pay.

Pick up prices

“No one likes increasing the price of their product, but in these trying times, you have to move with the current climate or else you’ll become collateral. To improve your cashflow, you could test just how much your clients are willing to pay for your services by slowly upping the price of your offering.

It’s important not to rocket up your prices too quickly, as that might lose your business. However, gradually increasing how much you charge at a steady pace could help you even out the playing field a little. If you’re confident about your business and what it has to offer, don’t devalue yourself.”

Review your credit control

Considering your options for your credit control is another way you can improve efficiencies within your business. By outsourcing your credit control, it will allow you to free up time and focus on other important areas of running the business.