1:00 AM 23rd December 2024
business
Jonathan Cooper, Founder & Director of The Director’s Helpline and The Director’s Choice
Image by Annette Meyer from Pixabay
2025 is going to be a challenging year for UK businesses – especially in relation to finances.
With the Government increasing employer National Insurance contributions from 13.8% to 15%, businesses will be facing higher employment-related expenses, which could impact profitability and business viability, as a result.
There’s also the ongoing issue of bad debt. Many small businesses are shouldering the burden of late payments and unfulfilled invoices, which can snowball into significant cash flow problems.
UK SMEs saw this surge last year – seeing many SMEs having to write off almost £40,000 each in unpaid invoices over a 12-month period.
To help combat this, SMEs need to proactively assess their financial health, implementing robust credit control processes and staying on top of debt management.
Jonathan Cooper,
I believe that with increased financial pressure on UK businesses, this means we’ll likely see insolvency rates climb – perhaps not immediately, but in six months, there could be massive changes.
If we look at the Government’s insolvency statistics for October 2024, there were 1,747 insolvencies in total.
However, while this was a 10% decrease on the previous month, the number of company insolvencies remained much higher than those during the pandemic.
While all sectors will feel the financial impact of the Budget, there are some – including hospitality and construction – where already tight budgets will be further squeezed. This is due to the complex geopolitical backdrop, and subsequent impact on consumer confidence.
The recent change in government in both the US and UK, the UK economy’s slow growth, disrupted supply chains, and restricted cash flows, are hurdles that will continue to shape the future of business this year.
The pandemic taught businesses that forward planning and resilience strategies are key in helping maintain business continuity when the going gets tough.
Therefore, it’s likely that the uncertain economic backdrop will see directors and business owners seeking more advice on the running of their business – being more proactive rather than reactive.
SMEs that wait until financial issues reach crisis levels risk limited options and higher costs for recovery. Whereas, by engaging early with financial support experts, SMEs can gain access to actionable strategies that safeguard operations, such as restructuring debt, accessing grants, or improving operational efficiency.
For directors already facing testing financial circumstances, the key to survival and growth lies in targeted decision-making and seeking expert support before problems escalate.
Taking greater measures to prepare – surrounding themselves with the right support and advice networks – will help directors plan for different eventualities.
Ultimately, by focusing on cash flow management, tackling bad debt head-on, and leaning into expert guidance, UK SMEs can position themselves to weather the challenges of 2025, ensuring not just survival but sustainable growth in the long term.
This post was originally published on here
