How to protect your small business client’s balance sheets

The last 3 years have had a continuous impact on the health of small businesses, and it’s no secret that recent events and rising costs will only add to their existing pressures.

With 99.2% of the total private businesses in the UK being small or medium, our economy relies heavily on them and their success. Ensuring your small businesses clients can survive the continued economic turbulence, and ultimately thrive, will be in everyone’s best interests.

To help ensure that we can see small businesses thrive this year, it is important to  understand the current challenges they are facing and the concerns that could arise for your clients. Understanding these challenges can help you spot them early on, protecting them in the long run.

What are the key challenges to be aware of?

Taking a look at the recent challenges small businesses have been faced with, cashflow is one aspect that is negatively impacted. As accountants, you know best how important cashflow is for your clients business health and growth, so it’s important to make sure your clients can be prepared for risks to their cashflow.

Recent research has found that 1 in 3 businesses might struggle to cover costs in April when bills spike. This comes as support for energy bills comes to an end, an increase in corporation tax and the largest ever increase in minimum wage. Whilst some policies in April, such as the minimum wage increase can be a positive for workers, for small businesses this will add unsustainable strain and could lead to an inability to pay staff wages.

To add to this cashflow strain, debtor days also seem to be on the rise, with research showing the average late payment days has risen to 8.4 days.

Despite these challenges, there are steps small businesses can take to minimise risk and make sure they are well protected in 2023.

Glen Collins, Head of Policy at ACCA, describes the value of  support from accountants enables businesses to “plan, recover and grow”.

What can you do to support your small business clients?

With the economic challenges in mind, there are a few behaviours you can encourage your clients to take to ensure their cashflow and balance sheets are well protected, these are:

• Reviewing pricing for jobs with consideration of rising costs.
• Check their own business credit profile and boost their score when needed. This will enable clients to win bigger contracts, negotiate better supplier terms and access funding at the best rates.
• Reviewing efficiency of their internal working capital.
• Checking the credit scores of client’s customers and suppliers to address external risks.

To give you a more detailed insight into how to support small businesses in 2023, Capitalise and the ACCA, have developed a complete guide on the challenges businesses are facing, and how to protect against them.

Read the full guide to find out more.

By the ACCA

The post How to protect your small business client’s balance sheets appeared first on Accounting Insight News.