REVEALED: Top business concerns for 2021 (and how to overcome them)
Further lockdowns, Brexit and late payments are the biggest concerns at present for UK business owners and directors, according to new research. This article explores these top three concerns in more detail and offers some tips on how you can overcome them.
Further lockdowns are the number one worry for UK business owners, according to the research conducted by Purbeck Insurance Services. While there’s not much you can do to prevent further lockdowns, it is possible to prepare your business to limit the damage that another lockdown might cause.
1. Review your initial COVID-19 response and update your pandemic plan
Look back and review your business’s response to the previous lockdowns. What went well? And what could you have done differently? Understanding the strengths and weaknesses of your initial response will allow you to develop a better business continuity plan for any future lockdowns.
2. Assess the risks in your supply chain
Previous lockdowns had a significant impact on supply chains across the world. And, for many businesses, these supply issues remain ongoing. Review the risks of another lockdown on your supply chain and consider how you could reduce the impact. For example, you might benefit from identifying a number of alternative suppliers. Or, you could even explore opportunities to design and develop parts in-house which would further reduce your risk.
3. Be flexible
The best way to help your business to survive another lockdown is to find alternative ways to stay open. For example, could you sell products online, set up a streaming service or provide home delivery? Being flexible with your approach and maintaining a steady stream of income could reduce the financial impact on your business.
Worries about the lingering impact of Brexit are also keeping SME owners and directors awake at night, with 27% citing it as their top concern. This supports the latest Business Insights data from the Office for National Statistics showing that paperwork remains a top challenge faced by businesses for importing and exporting.
1. Ensure you are complying with new rules
Doing business with Europe has changed, and you now need to follow new rules on exports, imports, tariffs, data and hiring. If you haven’t already you should check what the new rules mean for your business and make any necessary changes. The Brexit Checker Tool on GOV.UK gives businesses a personalised list of actions that they need to take.
2. Get professional support
If you are struggling to understand or implement the new rules you are not alone. According to a British Chambers of Commerce survey, half of small business exporters are struggling with the new rules post-Brexit. The best way to overcome this confusion and get to grips with new processes is to seek professional support from an expert. This could save you lots of time, resources and stress.
3. Explore trade finance
Brexit has caused many foreign suppliers to increase their prices, shipping costs have gone up and many companies are experiencing supply delays. For many businesses, this means that the cash flow gap between paying suppliers and getting paid has become more difficult to manage. Fortunately, trade finance solutions exist which allow importers and exporters to keep cash flowing when trading internationally.
Late payment by customers was revealed as the most pressing worry for 18% of respondents. Although data shows the prevalence of late payment hasn’t increased as much as expected during the coronavirus pandemic, the impact of customers not paying on time has worsened. Intrum’s European Payment Report 2021 found that nearly 80% deem long payment terms and the implications of debtors paying late to be problematic – more than did so 12 months ago – and it’s likely late payment will only become more widespread as government support is scaled back and deferred VAT payments and repayments on government-backed loans fall due.
1. Refine your credit control procedures
The process of avoiding late payment and bad debt should begin as soon as an order is placed. And your credit control procedures must reflect this. Make sure you’re always invoicing promptly and accurately and that you contact each customer before the due date to confirm their intentions to pay. You also need to have a plan in place for when invoices go overdue. This will allow you to work quickly and effectively to get your money.
2. Bring in some added expertise
Unfortunately, sometimes no matter how hard you try some customers just won’t pay. These trickier, time-consuming debts could benefit from the added weight of a debt collection agency. Or, If the process of chasing customers is taking too much time and resource away from your business, you could explore outsourcing your credit control function to a specialist agency.
3. Consider your cash flow
When trading on credit terms, the length of time customers take to pay can cause serious cash flow implications, even before late payments occur. Fortunately, a number of finance options exist specifically to tackle this issue. Invoice finance, for instance, allows businesses to release funding against their sales ledger, with up to 90% of the value of invoices released within 24 hours.
Plus, some facilities can incorporate a sales ledger management service to remove the burden from your business and further reduce the impact of late payment. Meanwhile, bad debt protection can be provided to safeguard your cash flow against late payment and protracted default.
How we can help
Can you relate to any of these concerns? If improved cash flow would help to alleviate some of your worries, we could help.
As an independent commercial finance broker, we will listen to your funding needs and challenges in order to identify the most suitable solution and provider.