The last three years have been a challenging time for both emerging and established businesses, from the COVID-19 pandemic to the cost of living crisis, and now the potential for inflation to continue into 2023. 

The unpredictability of the UK economy has been difficult for UK businesses to navigate and survive, with the latest data revealing that insolvency rates have increased by 27% since the pandemic. 

While the current economic climate is daunting and there is increased risk for business owners, there are measures you can take to protect both you and your business. 

In this article, we explore the ways business owners can protect their businesses financially in 2023, including how to manage vital cash flow and where to find additional financial support to prevent insolvency. 

4 Tips for managing and increasing cash flow 

Preserving and increasing cash flow is essential to your business’ success. Without it, you can’t make loan repayments, equipment purchases or even manage payroll, and insolvency is likely to follow.  

You can never predict what’s around the corner, especially in the current economic climate, but there are steps you can take to ensure you’ve done the most you can to protect your business. 

Here are 4 tips for how to manage and increase your cash flow: 

1.    Restructure payments 

With rising costs and interest rates, one of the key issues you might experience in your business right now is making payments to your vendors or suppliers. 

If you are struggling with cash flow, your payments may be late which risks tarnishing your business relationships.

An effective way to navigate this is to open a discussion with your vendor about adjusting payment days. Chances are they will appreciate your honesty about the matter, instead of having to communicate with you about a missed payment that you haven’t acknowledged. 

However, if this does not suit your current vendors, you could also meet with alternatives who may be able to offer you inventory or supplies at a better cost.  

2.    Adjust your inventory 

Now is a great time to re-evaluate the products you stock.

Review your inventory and take note of which items can be sold at a discounted or sale price. Once these items have depleted, invest in stock that performs better. 

3.    Lease equipment 

For some businesses, having up-to-date equipment is crucial to their success. However, investments such as these can place businesses in a vulnerable position.

By leasing your new equipment instead of buying it outright, you can avoid paying large upfront costs. 

4.    Apply for financial support early

When it comes to financial support in 2023, it’s better to secure a loan before a time when your business is in desperate need and ensure that you have a reserve of cash before you encounter tough times. 

This is because business owners, especially those who own SMEs, may struggle to secure loan application approval, even during a stable economy. It may take some time before you find a lender who approves your loan, and they may want you to agree to a personal guarantee before you are given access to funding. 

Consider post-pandemic support

Another way you can find support during these uncertain times is to apply for one of the schemes set up for businesses after the pandemic. 

These schemes were introduced by the government in the wake of the COVID-19 pandemic, when businesses struggled to stabilise and preserve cash flow. 

Substantial financial support was offered to businesses in the form of CBILS and FLS facilities, which are still available.

However, it is becoming increasingly expensive to make repayments. As businesses struggle to make repayments for the loans secured through the schemes, insolvency is becoming an increasingly common result.  

Protecting your personal guarantee 

A personal guarantee is often the golden ticket that allows you to secure a loan. However, with insolvency rates on the rise, a personal guarantee puts you at significant risk.

At a time when your business should be your sole focus, the last thing you need to be worrying about is losing your personal assets.

Personal Guarantee Insurance (PGI) is an innovative policy designed to protect your assets in the unfortunate event of your business going into insolvency. 

The benefit of PGI is that it can be applied to both new and existing bank loans, meaning that from today you can gain peace of mind and protect your assets.  

Personal guarantee insurance from Purbeck 

With such uncertain economic times ahead, it’s wise to protect your assets by insuring your personal guarantee. 

Purbeck are the UK’s leading provider of PGI, with policies that cover up to 80% of the assets used for your personal guarantee. 

To find out how PGI can help you protect your business, without the personal risk, get in touch with our team today.