How’s your cashflow?

The Daily Telegraph reported that at May 2022 inflation is up to 9.1pc, the sharpest increase in the cost of living since Margaret Thatcher was in Number 10. How’s your cashflow doing?

The surge may prove to be the peak of Britain’s inflationary crisis but there are signs that the elevation in prices are here to stay – and could get worse. It appears some producers still aren’t passing on their soaring costs as they position for market share. However, they may soon have to if they’re wanting to remain viable.

The knock-on effect

The surging inflation will cause business cashflows to tighten and stretch payment terms This ultimately puts stress on business owners and their cashflow.

Many businesses had a shoulder to lean on during the Covid – 19 pandemic with Government backed loans and the furlough scheme. Just as they thought that trading conditions were starting to ease and they were in for a smoother ride, along came massive hikes in the cost of energy, fuel, raw materials and freight.

According to Drewry World Container Index the cost of a 40-foot container from Shanghai to Rotterdam has increased by 570% in the last 12 months.

These are eye watering numbers and just one example of rising costs that businesses need to absorb.

If a business owner needs cash then the following facilities may provide the right solution:-

• Invoice finance – invoice finance releases cash tied up in outstanding invoices providing access to money before your customer has paid
• Remortgage commercial property – release cash tied up in equity. Sometimes, it’s feasible to release cash without increasing the mortgage payment
• Business loans – can be used for any business purpose, normally repaid over 3 – 5 years
• Asset refinance – release equity tied up in business assets – trucks, trailers, plant/ machinery
• Merchant cash advance – if your clients are consumers and you use a card terminal, advance cash against future card receipts. Simple process and offers within a few days.

Even if a business’s cashflow isn’t under pressure there maybe other reasons to look at securing funding. Here’s a few examples:-

• Negotiate favourable discounts with suppliers for quicker settlement of invoices
• When competitors are cutting costs, it may be advantageous to invest in your business to give you the edge in the race
• Purchasing stock at today’s prices may help curb inflationary pressures
• Ensure you have enough stock, a common problem recently has been lack of availability
• Avoid future freight cost increases

The larger intermediaries, like PMD BF can arrange a wide range of finance products including:-

• Asset finance/ refinance
• Invoice finance
• Commercial property finance
• Business acquisition finance
• Business loans
• Merchant cash advance

Brokers can help

The economic outlook forecasts turbulent times ahead for the next few years. Business owners need to ensure that they have strong, robust cashflows and quick access to funding if required. The intermediary community is going to be key to business survival. This is because they can provide much faster decision times and access to a wider choice of lending products. Not over-exposing to any one lender could be the ultimate survival tool for the tough times ahead.

Now is as good a time as any to discuss the range of business finance facilities we have available. For more information, get in touch with one of our PMD Business Finance experts today on 0161 633 2548. To learn more about our full service offering, check out our website. You can also keep up to date on our latest events and opportunities via our LinkedIn.