UK businesses are facing a future that’s hard to predict. Economic conditions are harsh, legislation is in a state of flux and supply chain issues are still a problem. To overcome these challenges, MarketFinance believes it’s vital to plan for uncertainty – to forecast the road ahead, flex your strategy to fit the current conditions and use funding to bridge the cashflow gaps.

Chris Findlow, VP of Partnerships at MarketFinance, highlights how uncertainty is the new baseline, and why a change in business outlook is the key to riding out the current slowdown. 

Being a UK business owner in 2022 is no walk in the park. Whatever your industry or sector, it’s a tough time to be trading, and the pressures look unlikely to ease in the near future. 

Your clients are faced with a global economic slowdown, a country that’s already in recession and the messy fallout from Brexit. That’s on top of the ongoing Covid situation, supply chain issues in many sectors and huge rises in energy costs. Plus a cost-of-living crisis that’s bringing living conditions down to levels not seen since the 1970s. There’s no way to sugar-coat it – now is not the best time to be operating a small business in the UK. In fact, recent stats from the Federation of Small Businesses (FSB) shows that a majority of firms – 53% – expect to stagnate, shrink or fold in the coming 12 months.

But – and this is hugely important to underline – this doom and gloom doesn’t have to mean the end to your clients’ aspirations, growth targets or innovation. 

What’s needed is a fresh outlook – a way to deal with the more dynamic nature of trading in 2022. And an acceptance that the old rule book must be thrown away and replaced with a more proactive, flexible approach to running a business.

Throwing away the pre-pandemic playbook

The business world has changed radically in recent years. The pandemic forced much of this change upon us, but there have also been significant changes in how we work, how we trade and the global nature of business operations in the early 21st century.

The old world of low-level external threats, stable cashflow and predictable trading markets is gone. What we’re faced with is a business landscape that’s uncertain, unpredictable and in a constant state of change.

For example:

• External threats are on the rise – the world is a less stable place. We’re seeing increases in global conflict. Climate change is a very real and pressing problem. And there’s a meaningful lack of talent and people in many industries.
• Sales and revenue can’t be guaranteed – sectors that were once affluent are now finding it hard to make ends meet. The hospitality and leisure industry has found the pandemic hard. And long-standing sectors, like construction, are battling to make profits against a backdrop of rising costs, poor supply and increasing operational difficulties.
• Government intervention can’t be guaranteed – the UK Government is no longer a solid supporter of small business. Recent policies appear to favour large corporations, and tax cuts have done little to help the smaller enterprises that make up 99.9% of the UK business population.
  

The pre-pandemic playbook is now redundant. What we need is a new outlook that factors in the current business reality, so clients can react to the unpredictable nature of trading in 2022.

‍A new outlook – learning to forecast, flex and fund

The key to getting through this recession is to embrace the dynamic nature of the business landscape and to plan for uncertainty – but how can your firm enable this?

As business owners, your clients can no longer depend on the stability of the market. What they need is a new way to navigate the challenges, react to the threats and remodel their strategy as times change. And, as their trusted adviser, your firm is in the perfect position to offer a more proactive and timely kind of guidance in these testing times.

We believe there are three core pillars where you can advise clients: 

1. Forecasting  – as a guiding light in the darkness
2. Flexing – to give your business clients new superpowers
3. Funding – to help bridge the cashflow gaps
   

Let’s take a look at these ‘Three Fs’ in a bit more detail – so you can see the link between the business advice you already offer and how to overcome the hurdle of uncertainty.

1. Forecasting as a guiding light in the darkness

With the business journey now so difficult to predict, forecasting has become an ever-more valuable tool for Xero-based accounting firms and their clients. 

Xero apps like Spotlight, Futrli, Fathom and Fluidly all offer detailed ways to project data forward in time. By helping clients run forecasts on a more regular basis, you sketch out the road ahead and get a better picture of how the next month, quarter or year may pan out. 

Having that added financial and non-financial intelligence is incredibly useful, especially when it comes to identifying seasonal drops in revenue and cashflow holes. It’s also invaluable when looking at ‘what-if scenarios’ and planning out best and worst-case scenarios. If you can show clients a Plan A and a Plan B, you give them options – and choice is likely to be a core component of a well-thought-out business strategy.

2. Flexing to give business clients new superpowers 

Ramping up the forecasting gives clients an improved view of the road ahead. And this enhanced oversight makes it far easier to react, flex and change the client’s business strategy as events unfold, or the market changes. 

The ability to pivot and re-invent was a key skill for businesses that thrived during the pandemic. If you were a coffee business with a core customer base of city commuters, pivoting to become a coffee delivery business was one way to flex and move forward. With unknown challenges waiting around the corner, and better intelligence based on your forecasts, clients need help becoming more flexible and innovative. This could mean diversifying into new markets. Or it could mean moving the business online to embrace the growing eCommerce boom. 

You know your clients well and understand their main aims as a business. With that foundational knowledge, you can quickly help them flex and evolve to meet new challenges.

3. Finance to bridge the cashflow gaps

We all know that cash is king. But an unpredictable business landscape is the enemy of stable cashflow. With the UK economy currently so depressed, it’s likely that cashflow gaps are going to appear as you try to keep your clients’ businesses on course.

If a client’s customer goes bankrupt, your client may well be landed with a host of unpaid invoices. If prices for raw materials continue to sky-rocket, their overheads will increase to a point where operational cashflow suffers. These cashflow holes are like the missing rungs in the rope bridge that leads to business success. Your client still knows there’s a way across (and their end goals remain the same) but they know these cashflow gaps will make the journey more risky and more difficult.

Having a short-term finance facility in place is the best way to bridge these cashflow gaps. Invoice finance is one of the most practical solutions you could introduce to clients. It’s fast to set up, gets cash to the client quickly and doesn’t tie the business into long-term loan repayments like a secure business loan might.

You have the expertise, the market knowledge and the accounting data that’s needed to find the right finance for the job – and that’s of immense value to your cash-strapped clients.

The benefits of using invoice finance

The traditional way to solve a shortage of cash in the business was to take out a bank loan, or ask the bank manager for an extension to the company’s overdraft. But both of these options saddle your client with additional debt. When cash is short, it’s not good financial planning to also increase your debt liability into the bargain.

Invoice finance is a simple way for clients to borrow money against the value of their existing invoices. The invoice finance vendor takes a percentage of your client’s unpaid invoices as an upfront payment and then issues a loan for the rest. The business then collects their customer’s payment and pays back the funds they’ve been loaned. 

Using invoice finance to bridge the cashflow gaps:

• Is fast to set up and straightforward to manage for the client
• Doesn’t increase the client’s overall debt level
• Can be turned off and on as and when finance is needed

At MarketFinance, we’ve made using invoice finance as simple and seamless as possible. It’s an easy 4-step process that can be completed in a day: 

1. Clients can apply online in minutes. Someone from our team will be in touch same-day
2. Upload their invoices and we’ll let the client know the cost upfront
3. The client’s customer verifies the invoice details
4. We provide the funding – with an advance of up to 90% within 24 hours
   

Flexing to meet the challenges

No-one has a magic wand to dispel the economic issues and external threats that are making life more difficult for your clients. But by planning for uncertainty and applying the Three Fs of forecasting, flexing and funding, you give clients the best possible foundations for recovery.

The coming months are likely to be a turbulent time for your clients. But if you can instil a fresh outlook and ensure they stay properly funded, there’s no reason why these businesses can’t continue to flourish and grow as we hit 2023 and beyond.