UK SMEs hit by increased operating costs » SMEInsider

UK SMEs hit by increased operating costs

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More than half of SMEs in the UK are experiencing increased operating costs, which is having a negative impact on small business cash flow.

According to the Close Brothers Business Barometer survey, 59 per cent of UK SMEs are experiencing an increase in their operating costs, and of that figure, 58 per cent say this is having a negative impact on their cash flow.

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.

 “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,” said Mike Randall, CEO of Close Brothers Asset Finance. “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.”

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,” Mr Randall added.

“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,” he said.