The Christmas buying season is now well underway for many of your firm’s business clients. Clients in retail, hospitality and consumer-based sectors will be expecting a boom in footfall, sales and December revenues. But what happens once the Xmas good cheer fades, January arrives and these clients have to prepare for the first quarter of 2022?

This month we’re taking a look at the ongoing challenges for 2022, and how your firm can help clients remain organised, well-funded and focused on great customer relationships.

Facing the New Year challenges

Keeping an SME on track for success and profitability in 2021 has been tough work. Your clients have faced an unpredictable global pandemic, which may have resulted in uneven revenues and poor cash flow. But one of the most profound and disruptive challenges has been the ongoing supply chain issues that many sectors have experienced.

The UK’s supply chain issues are unlikely to resolve themselves soon. So, these logistical and operational problems need to be factored into your client’s planning for 2022.

The supply chain issues we’re seeing have not come about because of a single cause. There are a multitude of factors that are feeding into these operational hiccups.

These factors include:

  • Ongoing staff shortages – the pandemic has had a pronounced impact on staffing levels, and these global staff shortages are predicted to continue well into 2022. Staff sickness is expected to increase over the winter period, and many sectors are still reeling from the staffing issues brought about by Brexit.

  • Brexit hold ups – being outside both the EU and the Customs Union has created difficulties for British exporters and importers. The mounting processes and delays created by the UK’s exit has increased form-filling and slowed down deliveries. For many it has added to the overall costs experienced by UK businesses trading beyond our borders.

  • HGV lorry driver shortages – a lack of trained and experienced HGV drivers has wreaked havoc on many supply chains. EU drivers weren’t tempted by the Government’s offer of temporary work visas and driver shortages are predicted to continue until at least Spring 2022.

  • High costs of raw materials – prices of raw materials have risen steadily over the last year and are expected to carry on rising. Materials like steel, timber and other construction and manufacturing basics are hard to come by. And this scarcity is reflected in rising prices that will likely continue for the majority of 2022, or longer.

How are UK SMEs coping at present?

MarketFinance recently spoke to 1,000 different UK businesses, to gauge how well they’re coping with the current supply chain issues. And the results of this survey certainly seem to show that there’s a silver lining to the current supply chain cloud.

A quarter of SMEs we spoke to reported that their prices had almost doubled over the past 6 months, due to the rising global costs of raw materials. However, the majority of SMEs are absorbing these increased costs and only a fifth are passing on the additional cost to their customers. That’s a good sign that SMEs see the value of these customer relationships.

Times are hard, and 2022 is likely to present many of the same challenges. But there is an air of optimism coming from the SME community, as our CEO, Anil Stocker, commented:

The current economic environment with rising costs is presenting some headwinds and headaches for SME owners but they are proving to be as resilient as ever. The vast majority have been thinking ahead and accounted for the longer term scenario, which will hold them in good stead to do business.”

Working to build the best possible foundations for 2022

SMEs and their owners will be looking to you and your firm to help them get through any rough patches in 2022. And, as their most trusted and valued adviser, it’s important that you can be both innovative, proactive and assertive when it comes to offering your core advice.

Key areas where you can support your clients include:

  1. Running forecasts and projections for 2022 – the more insight clients have into their future position, the easier it becomes to avoid the pitfalls. With 2022 still very much an unknown quantity, running various projections and scenarios for clients will help them to plan ahead, come up with a Plan B and build some flexibility into their strategy.

  2. Reviewing clients’ cash position and working capital – with material prices still increasing and wages on the rise, clients are going to need plenty of working capital to keep the lights on in the business. Checking in regularly on their capital position and cash flow status will help you understand and communicate their financial health in more depth. Staying on top of these crucial elements will help your clients manage their situation.

  3. Ensuring clients have access to the best funding – if clients don’t have deep enough cash reserves, you’ll need to take action to create a viable funding strategy. Whether this is making use of invoice finance, flex loans or other forms of business finance, a deeper level of funding advice and support is likely to be needed.

  4. Assessing and updating their business plans – the business landscape has changed significantly over the pandemic, and clients are well-advised to revisit their business plan to make sure it’s still relevant. Pivoting to new sectors or new products may well be the answer for 2022, so your strategic advice is likely to be invaluable.

Kickstarting 2022 with the Recovery Loan Scheme

Helping clients remain properly funded and capitalised will be central to your planning conversations for next year. With the Autumn Budget announcement of an extension to the Recovery Loan Scheme (RLS) until June 2022, SME clients have another viable route to funding.

MarketFinance is an accredited lender under the Recovery Loan Scheme and can provide recovery loans to eligible business clients that meet the current criteria. Successful applications can deliver between £50,000 to £350,000, 6 months of interest-only payments and a single fixed fee, capped at 4%.

For clients that need a cash injection to enhance their 2022 recovery and growth plans, the RLS is well worth investigating as an attractive route to funding.

Find out more about recovery loans and the RLS in our recent blog post.