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How SMEs can manage the impact of rising fuel prices

Small businesses with vehicle fleets are always monitoring fuel prices, so the rising cost of petrol and diesel is a concern. So, how can these firms manage the impact of high prices and safeguard cashflow? Alternative finance can help.

According to new figures from the Department for Business, Energy and Industrial Strategy, fuel prices are at a six-month high. This means filling up at the pump is more expensive and when you’re a small business that has to fill up a large number of vehicles on a regular basis, this translates into a significant bump in spending.

Of course, fuel prices fluctuate and small businesses might find some relief if petrol and diesel costs slide back in the future. But right now, these firms are dealing with a bigger hit than normal and having to manage the impact on their capital. Furthermore, high fuel prices are not the only fleet management-related cost issue that small business must contend with.

For example, there is vehicle telematics. This is a fast-developing digital technology that has the potential to generate significant time and money savings for small businesses. It can help employees use cars more efficiently by ensuring commercial vehicles always follow the most efficient routes, and help managers more effectively manage their fleet resources. Clearly, the potential for savings on fuel and other costs is attractive, but adopting and running the technology comes at a cost and while large companies have the resources to take such investment in their stride, for small businesses, taking this kind of step is fraught with risk.

A similar analysis can be applied to the steady transition to all-electric fleets. The changeover is forecast to take a decade or more, but it is under way. This evolution is a positive development, not least from an environmental point of view, but again, there are initial costs and significant investment required that will put small businesses in particular under pressure.

So, how can small business owners protect cashflow against the impact of high fuel prices while targeting the efficiencies offered by new digital technology and all-electric vehicles?

Alternative finance has a role to play.

In the wake of prolonged caution from traditional lenders, the likes of invoice finance, asset finance, peer-to-peer lending and crowdfunding are offering small business owners an alternative means for accessing funding for safeguarding cashflow and essential investment, such as in digital vehicle technology and electric and hybrid vehicles.

This is how a small business in Sussex used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to invest in new equipment.

The current market climate, and its impact on business lending, is putting small businesses under significant pressure. In order for business owners to keep afloat and maintain momentum, they need to be aware of all the funding options available to them, including alternative finance.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.

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