Small businesses faced with costing dilemmas

Invoice finance solutions such as factoring and invoice discounting can help reduce the cost pressures caused by costly overheads and lower margins

The rising costs of overheads and problems accessing external funding are continuing to cause small businesses major headaches in increasingly tough markets, the Forum of Private Business (FPB) had indicated.

With energy rates being hiked by various firms this week, as well as increasing pump prices and raw material costs, many small businesses are faced with either eroding margins or passing increased prices onto customers.

Approximately a third of FPB members have indicated that they can’t afford to raise product prices to customers, so margins have had to be cut. However, a larger proportion has had to raise prices in order to continue trading effectively.

“The major reasons for increases in prices are predominantly down to VAT and energy prices rising, coupled with the weakness of sterling for importers," Alex Jackman, the Forum’s senior policy adviser, said of the problems faced by small businesses.

“Unfortunately, it doesn’t look as if there is going to be any respite any time soon,” he concluded.

Funding solutions for small businesses

As the cost of doing business in the UK continues to increase, small companies face a tricky decision as to how to cope with decreasing margins.

Passing on the cost to customers can often prove unpopular and risk upsetting valuable relationships whilst, on the other hand, reducing already-tight margins could severely impact cashflow and the viability of the business in question.

Invoice finance, an alternative funding solution to traditional bank credit, can offer businesses welcome cashflow assistance by providing monies for invoices upfront.

Why not browse our website to find out more about just how invoice finance works, or give us a call today on 01756 694933 and have a chat with one of our friendly team of experts.