The UK Government’s new industrial strategy has brought a welcome focus on the needs of small businesses with a unique opportunity to strengthen their financial footing and plan for sustainable growth. With new support being rolled out across finance and payment practices, accountants can see several practical steps businesses can take immediately to set themselves up for success.
Business confidence in the UK is fragile, and UK businesses are keen to see some certainty and reassurance from the government, as indicated in the most recent ACCA and IMA Global Economics Conditions Survey (GECS). The Small Business Strategy should hopefully start to give much needed guidance and begin restoring business confidence going forwards.
Take advantage of improved access to finance
One of the most promising elements of the new strategy is the enhanced funding environment. For example, the British Business Bank’s recent announcement on the Growth Guarantee Scheme, additional sector-specific support, and more startup loan options has improved accessibility in the funding landscape.
The Growth Guarantee Scheme provides more solid financial foundations for entrepreneurs and SMEs, but to access them, businesses need to be prepared. The critical thing is having a clear business plan. Lenders and grant providers want to know what the money is for and whether it’s a good investment. A clear strategy gives confidence not only to investors and lenders but to business owners as well.
Engaging with an accountant early in the planning process can help clarify a business’s growth ambitions, and choose the right type of funding – be it debt, equity, or angel investment – to avoid wasting time on options that are not a good fit.
Crack down on late payments
Late payments remain a serious threat to small businesses, contributing to cash flow issues that can ultimately lead to failure. The UK Government estimates that approximately 381 businesses are forced to close every day due to cash flow issues resulting from late payment.
One of the most immediate actions businesses can take is to ensure contracts are in place and payment terms are clearly outlined, and invoices are issued promptly and consistently. New software tools can help automate chasing payments, but equally, small businesses shouldn’t be afraid to follow up with payments they are rightfully owed.
Looking ahead, businesses will also benefit from potential reforms empowering the Small Business Commissioner, who may soon be able to proactively investigate poor payment practices. This shift aims to rebalance power dynamics, giving small business owners more confidence that action can be taken without risking relationships or future work.
Boost your financial resilience
Beyond external funding, small businesses may overlook the value of trade credit and their credit rating. Credit rating is an asset, and it should be managed like one. Improving it can unlock better terms with suppliers and reduce reliance on expensive borrowing.
Growth itself can also put strain on cash flow, so planning is essential. High growth businesses may be at greater risk because of upfront costs. Sometimes it’s better to take a lower margin contract with faster payment terms to sustain growth, rather than hold on for a bigger payout that comes later and potentially puts strain on finances in the interim.
Accountants can help model different growth scenarios. Best case, worst case, and middle ground scenarios are useful to determine how much working capital is needed to maintain stability, and where cash is needed at certain points in the calendar year, such as employee salary reviews, business insurance renewals, and HMRC payments.
Work with an accountant to maximise support
Accountants play a crucial role not just in compliance but in strategic support, particularly when it comes to funding, managing cash flow, and evaluating risk.
Asking your accountant what they have seen work for other businesses in your sector is more sustainable than reinventing the wheel. They can also guide businesses towards underused support, such as trade finance or even networking through the local business ecosystem.
The government’s new strategy represents a shift towards a more supportive environment for small businesses, but to benefit, business owners must act. From improving contracts and payment practices to refining their growth plans and credit management, small steps taken now can help secure long term success. Accountants and advisers are not just a source of a business’s financial stability; they are essential partners in navigating the journey.
