Finance professionals in UK businesses are actively reducing expenses, with 43 per cent doing so to minimise the impact of inflation and stricter monetary conditionals on their organisations.
Over a quarter have reduced their overheads by downsizing their office or reducing energy costs; 26 per cent are increasing the use of technology/automation in their businesses; and 24 per cent are planning to increase the prices of their services and products.
Charpentier: different challenges
These findings are part of independent research commissioned by Yooz, the Accounts Payable automation and Purchase-to-Payment provider, published in their third annual State of Automation in Finance report.
CEO Laurent Charpentier said: “Finance leaders across the world have stepped up to the challenges faced by many businesses over the past few years. However, as our third annual survey reveals, finance leaders are now facing a different set of post pandemic challenges as they need to manage remote workforces, retain and recruit talent to respond to global expectations for high Environmental, Social and Governance standards.”
To compound the issue, almost a quarter of UK finance professionals listed poor cash flow management as a key reason for late payments within organisations.
However, the use of automation is seen as one possible solution to improve the situation with over a third saying the technology could help provide faster and more cash flow management. And 32 per cent also said increasing their use of automation was an important tactic to help battle inflation.
Up until recently, it was near impossible for SMEs to secure the new assets they required, so they have been forced to use existing assets for longer and to refinance them to support cashflow
Another survey of over 500 businesses found that nearly a third had operated existing machinery longer than planned in the past 12 months, with as many again acquiring pre-owned machinery due to lack of supply. A fifth of companies reported that they had refinanced an existing piece of machinery.
A similar story was reported with commercial vehicles, with 34 per cent running these for longer than planned and 20 per cent acquiring pre-owned equipment.
The problem forms part of a wider issue SMEs face with the broader supply chain, with companies reporting a deterioration across several areas of supply, according to Paragon Bank.
The main issues businesses faced were in cost and availability. Forty-three per cent said the cost of goods and services had worsened in the previous three months, versus 23 per cent that said it had improved. Meanwhile, a third reported the availability of goods and services had worsened.
SMEs also recorded a deterioration in the reliability of suppliers and their financial stability.
Improvements were seen, however, when it came to ESG practices, with a quarter of firms reporting that supplier performance had improved.
John Phillipou, Paragon Bank SME Lending Managing Director, said: “Supply chains were significantly disrupted by the Covid pandemic and are only just getting back on their feet today.
“Up until recently, it was near impossible for SMEs to secure the new assets they required, so they have been forced to use existing assets for longer and to refinance them to support cashflow. We have certainly seen a strong increase in lending against refinanced assets.
“More broadly, companies have experienced disruption in their supply chains, particularly in areas such as the availability and cost of goods. We would expect to see these pressures ease as inflation comes down and global supply chains return to more normal conditions.”
