Letters: When the going gets tough
[Re: Tax cuts are not enough to help the small businesses facing crippling energy bills, Sept 2]
Businesses are facing soaring costs and weakening demand which threatens their existence.
From the start of April to the end of June, there were over 5,600 registered company insolvencies in the UK, an 81 per cent increase from Q2 2021.
Firms need to get creative and explore alternative financial levers to avoid a similar fate. The standard approach for many to optimise cash flow is through supply chain finance (SCF). This allows businesses to lengthen their payment terms. But this can be difficult for SMEs to access due to checks and a lengthy authorisation process. If onboarded, it could take businesses months before they reap the benefits.
Pay Asset Finance (PAF) could be a better alternative for many firms. This allows employers to process payroll into a form a funder can finance.
This money is then made freely available to the employee through a flexible pay process increasing their cashflow and reducing the wait for payday. This can be an attractive perk for firms looking to attract and retain talent while improving productivity. UK firms need to look beyond traditional financing methods otherwise we could be facing an ever-increasing number of insolvencies as trading conditions worsen in the coming months.
David Brown
Chief executive and founder of HI