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How SMEs can manage the cost of rising inflation

Rising inflation doesn’t mean bigger bills just for consumers. SMEs have to dig deeper too. And the increase couldn’t come at a worse time. Access to all available finance solutions, including alternative finance, is vital.

Inflation is significantly above the government’s target rate and rising. What this means is small business owners have to find the money to pay higher bills at the same time as they have to compensate for weakened buying power. This extra squeeze on finances comes at a time when small businesses are already straining under the burden of a range of other costs.

New figures released by the Pensions Regulator show that businesses in the UK are having a difficult time meeting their pension auto-enrolment obligations. According to the Regulator, almost 800,000 companies have yet to comply with auto-enrolment and are in danger of being fined.

Cost is likely to be a factor behind the delay. But the bill for auto-enrolment is only part of the picture. The costs of cybersecurity, late payment and living wage and apprenticeship reform also have to be met, all amidst lethargic market conditions depressed by prolonged uncertainty concerning the country’s exit from the EU.

As an isolated cost, the bill linked to rising inflation is relatively small, but when companies are already walking a financial tightrope, it is enough to send some off balance and crashing to the floor. But alternative finance is helping SMEs stay on their feet and has an important role to play in helping business owners manage biting inflation-related cost increases.

According to the National Audit Office, the small business funding gap could be as much as £39 billion. With traditional lenders remaining cautious, businesses are increasingly turning to the likes of invoice finance, asset finance and peer-to-peer lending to fill this hole. Notably, PayPal has recently revealed that its lending to small businesses in the UK has broken the £400 million mark.

These services give business owners the power to safeguard cashflow and meet the various demands on their capital. With the impact of rising inflation becoming increasingly serious, the flexibility, accessibility and affordability of alternative finance are needed more than ever.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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