Means versus Mindset

Bibby Financial Services (BFS) has been providing funding for over forty years through economic ups and downs, so it is important to us to stay connected to the needs of small and medium-sized businesses (SMEs).

This is especially important in the current economic climate, where businesses are battling unprecedented cost pressures. In our recent survey of a thousand SMEs, sixty-six percent said inflation and high costs were their biggest challenges (download SME Confidence Tracker).

Balancing growth ambitions with cost challenges

The current high-cost environment certainly poses challenges, but they do not need to completely put the brakes on business. As a client told us in a recent discussion, he still has aspirations to grow his business and believes cost-cutting can only take a business so far. In other words, despite all of the external headwinds, SMEs still have ambition to move forward and grow.

Indeed, when we asked survey participants what they saw as the biggest opportunity for their business in the next six months, two-thirds said “attracting new customers.” However, businesses need the means to match their mindset.

The financial challenges of growth

Taking on new customers means having the cashflow to absorb more upfront costs to service these new contracts while meeting existing operational costs, paying additional staff costs, and managing overheads.

This is alongside navigating the challenges of customer late and non-payment. Sixty percent of those we asked stated that customers are taking longer to pay than they were 12 months ago, putting further strain on their cashflow. Nearly half said one or more of their customers had gone insolvent or stopped trading in the last six months, and almost a third had experienced a bad debt in the same time period.

Overcoming financial barriers to seize opportunities

SMEs are amongst the most resilient of businesses, and their ability to capitalise on opportunities will partly depend on their capability to leverage funding effectively. Nearly half of SMEs (47%) said it was more difficult to access finance now than six months ago. We have certainly seen examples of this with new clients, where existing facilities have been withdrawn or where they have struggled to secure funding.

Or survey showed the propensity to invest is greater among those using external sources of finance, demonstrating the additional helping hand external finance can give businesses with ambition to expand.

External funding can also provide a boost to cashflow and enable growth. One in three of the businesses we asked said that they don’t have the cashflow they need to grow, which is a barrier both to them and to our economy. Key to choosing a source of funding is to ensure it provides the flexibility needed to support both immediate needs and scalability.

Scalable finance solutions for sustainable growth

As new customers are won and sales orders increase, businesses could find themselves in an overtrading trap if they cannot raise the working capital needed to deliver new contracts. Our Invoice Finance solution can greatly support cashflow management as it bridges the gap between asking for and receiving payment. Unlocking cash from unpaid invoices releases working capital from what you have already earned, without taking on additional debt.

As you grow, the funding can grow in line with you. We can also support financing new equipment (or refinancing existing assets) through our Asset Finance Solutions, ensuring you have the tools needed to expand efficiently and sustainably.