Acceptable in the 80s, but not in a downturn
The latest labour market statistics from the ONS revealed that almost a million working days were lost in November 2011 due to the public sector pensions strike, bringing the figure to its highest level since 1989. In the 80s, such strikes were commonplace, but whilst they were inconvenient, they didn’t have quite as detrimental an effect on businesses as they have today.
As more strikes have been planned for 2012, UK SMEs will need to start thinking about the effect any future strikes may have on their various business functions. Specifically, SMEs may find that their company cashflow might suffer during strikes because many finance staff and signatories will not be able to get into work due to transport problems and having to care for children due to school closures. This means that payments don’t get made and cheques don’t get signed.
In addition, if the strikes affect the postal system, this can also throw yet further difficulties into the equation. Although we have one of the best postal systems in the world, if a postal strike occurs it is more likely that letters will be delayed. If these delayed letters contain crucial invoices, these will not be processed for payment immediately, which could lead to damaging dents in a company’s cashflow. However, moving to an electronic invoicing solution could avoid such problems from occurring.
When times are tight and cashflow is limited, many SME owners may consider a short term solution by using costly bank overdrafts or worse still, the company credit card. Both of which can exacerbate any weak cashflow positions. Instead, small businesses may wish to consider invoice finance – effectively a cash advance on all invoices raised - to enable them to meet the challenge of any potential cashflow problems that may arise as a result of potential strikes in 2012.
At IGF, we are aware of the additional pressures that disruptions such as strikes place on our clients’ cashflow and in order to help them we do have the ability to offer additional assistance. We always advise our clients to plan ahead for any eventuality, be that snow chaos, industrial action or even staff being absent during the summer holidays. We realise it is a very difficult time for many SMEs and we are very keen to ensure that our clients can continue to grow and stay as financially stable as possible.