SMEs must look to improve profitability, working capital and cashflow

12 Jan 2018

A number of new reports show that businesses are more optimistic about the global economic outlook, with hiring intentions returning to near record highs.

The EEF, the manufacturers organisation, said that 2018 has started on a positive note thanks to the good manufacturing PMI result. The IHS/Markit index registered a solid 56.3 after an outstanding 58.2 in November.

According to the findings, business owners believe a growing global economy will sustain new orders in the coming months, although many expected a deterioration in the UK.

The latest Business in Britain report from Lloyds Bank has also found that business confidence is “steady”, with investment and hiring intentions set to increase despite wider concerns about the economy.

Gareth Oakley, Managing Director, SME Banking, Lloyds Banking Group says: “Despite market uncertainty and global political turbulence, businesses are still upbeat.

“Many are looking to boost their investment and staff numbers which is very encouraging, even though challenges remain in recruiting skilled labour.

“While the Brexit negotiations continue, businesses are focused on short term threats – including managing higher costs and maintaining positive cash flow - so that they can prepare for whatever 2018 brings."

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, adds: “Firms continue to signal a positive outlook for their business activity prospects, but they are also concerned about prospects for the wider economy which represent a key downside risk. Nevertheless, the improvement in investment plans is a positive sign amid ongoing weakness in productivity growth.

“Firms, especially in the services sectors, indicate that upward price pressures are likely to persist over the next six months. Exports, meanwhile, are currently being supported by the exchange rate and strong global demand.”

Whilst it is good to hear that UK SMEs are feeling positive and optimistic about 2018, we don’t yet know what lies ahead as a result of the vote to leave the EU. It is therefore more important now than ever that business owners look at ways of improving profitability, working capital and cashflow, enabling their businesses to be more agile and flexible to respond positively to the changing economic landscape.

At Beavis Morgan, we work with a wide range of businesses of all sizes and across many different business sectors, helping them with strategic planning, system implementation, business turnaround and improving business performance for the future.

Our diverse team of tax professionals are also committed to ensuring that your tax reporting obligations are fully satisfied and that every opportunity to lawfully exploit tax savings is made known to you, restructuring your affairs in a tax effective and efficient way.

For further information about how we can help you and your business, contact Steve Govey or your usual Beavis Morgan Partner.