What will 2022 hold for us all is the question on everyone’s lips at the moment, especially for the business community. Many businesses are still struggling to recover from large scale losses incurred as a result of the pandemic and businesses were facing a struggle to improve their cashflow and raise investment even before the Omicron variant surged and Plan B was imposed. The UK economy is starting 2022 facing some key challenges. The renewed reluctance among consumers to spend and staff shortages triggered by Omicron and Plan B has meant businesses have a persistent weakness in cash flow, which is troubling as it leaves businesses more exposed to the impact of Omicron, rising inflation and potential further restrictions. There is currently a record rise in price pressures, material costs, higher energy prices and the hospitality industry will be hit with the reversal of the VAT reduction. As a result of under performance during the pandemic and the resultant effects on their financial state, it is important that businesses now evaluate their liquidity and short-term cash flow needs.
For many it will be hard to forecast reliably for what they can afford to repay so keeping payments to a minimum for at least a few months will be a priority. Short term borrowings will pose a risk if business only picks up slowly in 2022 or there are further restrictions. It may prove difficult to repay or renegotiate a short-term facility when the time comes. Like BBLS and CBILS the perfect solution is a facility where repayments are not required immediately or are reduced in the first 12 months and can be spread over a longer term as required. The alternative business funding sector includes a number of lenders offering cashflow funding repayable over terms greater than 12 months. Seek out some flexibility in repayment terms or the flexibility of repayment holiday for your client and such a facility could provide them with a safety net to ensure they are in the best position possible to start their recovery.
The near term will continue to be extremely challenging for businesses and more hopeful in the longer term. Help your clients assess their cash flow needs early in the new year and encourage action to ensure there is a reserve of cash available to them. The recovery starts now!