Rising Operational Costs Impacting UK SMEs
More than half (59%) of small and medium sized businesses across the UK are experiencing increased operating costs, and of that figure, 58% say it’s having a negative impact on their cash flow.
The figures come from the Close Brothers Business Barometer, a quarterly survey of UK SME owners and senior management from a range of sectors on economic and financial issues.
Key Drivers: Energy Bills and Raw Materials
Of those who are impacted by increased operating costs, almost two fifths state that rising energy bills are creating the greatest problem for them; while just over a quarter say that the cost of raw materials and stock is causing the most pressure on their cash flow.
Mike Randall
CEO of Close Brothers Asset Finance, Mike Randall said: “Operating costs have increased significantly over the past few years, and are arguably one of the most difficult things for small business owners to manage in the current climate.
“We work with businesses across a range of sectors and we can see that they are all concerned about operating costs, which is unsurprising given the energy requirements, raw materials and machinery that many require.”
SMEs Struggling to Pass On Costs
More than a third of firms surveyed say that while their direct costs have increased, they feel unable to pass any of this on to their customers.
“This is a situation that is leading to increased pressure on already-tight margins and it is entirely possible that operational costs will continue to rise for the foreseeable future,” said Mr Randall.
Expert Advice on Managing Financial Strain
“Our advice is that if you haven’t thought about your business finances for a while, then this is a good time to ensure your funding is structured to cope with this strain on cash flow.”
