Finance solution provider Novuna Business Cash Flow has shared insights for UK businesses to manage an anticipated £5.77m weekly increase in costs due to rising minimum wages by April 2025.
The company emphasises the importance of careful financial review to mitigate impacts on cash flow and profitability. It also advises businesses to explore different scenarios to predict the effects of increased costs on hiring, pricing, and investment decisions.
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For instance, businesses should consider how the minimum wage rise could impact staffing costs and whether adjustments to pricing or staffing levels might be necessary.
Businesses are encouraged to assess their workforce structure to identify potential cost savings such as reallocating tasks or consolidating roles to optimise workforce costs.
Options such as part-time, remote, or freelance work can help reduce fixed payroll costs without sacrificing productivity.
Investing in automation tools is recommended to streamline administrative tasks, improve efficiency, and reduce reliance on manual labour.
Novuna Business Cash Flow also suggests implementing tighter credit control policies or using software for prompt invoice issuance to reduce delays and improve cash flow.
Businesses can encourage faster payments from customers through small discounts for early settlement or late payment penalties can improve cash flow.
E-invoicing allows invoices to be sent in a standardised electronic format, eliminating manual data entry, reducing errors, and speeding up payment processing.
Regularly reviewing outstanding invoices and proactively following up can reduce the risk of bad debt.
Outsourcing credit control can enhance collection efficiency, reduce late payments, and provide greater certainty in cash flow management, the finance provider said.
Novuna Business Cash Flow‘s commercial and strategy head John Atkinson said: “The financial landscape for UK businesses is changing rapidly, and the cost of doing business is rising significantly. With National Insurance and minimum wage increases on the horizon, companies need to act now to protect their cash flow.
“Proactive planning, optimising workforce costs, and strengthening credit control will be critical strategies for businesses navigating these challenges. At Novuna Business Cash Flow, we are committed to helping businesses prepare for these changes with tailored financial solutions and expert guidance.”
Additionally, immediate working capital can be accessed through invoice finance, enabling businesses to release up to 90% of unpaid invoice value within 24 hours.
Finally, maximising returns on business savings is crucial.
Businesses should compare savings accounts to ensure competitive interest rates and consider higher-yield options like notice accounts or fixed-term savings.
Building a cash buffer is also advised to act as a financial safety net for future challenges or growth opportunities.
Last month, Novuna Business Cash Flow expanded its corporate sales and operational teams, with the appointments of Phillip Speed, Scott Pendlebury, Katarzyna (Kasia) Brzozowska, and Andy Sutton.
