Expert tips for UK businesses to manage £5.77m weekly increase in costs

Cash flow experts outline how businesses can prepare for the financial year ahead

With rising costs set to hit businesses in April 2025, financial pressures continue to mount across the UK. With such rises as the minimum wage expected to add £5.77 million to weekly payrolls across the country, managing finances is more crucial than ever for UK businesses. Novuna Business Cash Flow, a provider of cash flow finance solutions to SMEs and larger corporate entities across various UK sectors, shares five essential tips to help businesses protect their cash flow and prepare for the months ahead.

Five tips to strengthen cash flow and prepare for rising costs

To stay resilient amid rising costs, businesses must adopt proactive cash flow strategies. Novuna Business Cash Flow offers five practical tips to help SMEs prepare and thrive.

1. Financial planning and budgeting

• Update financial forecasts: Review your business finances carefully or speak to your accountant to assess how these extra costs could impact your cash flow and profitability.
• Scenario planning: Explore different scenarios to predict how increased costs might affect decisions around hiring, pricing, and investment. For example, consider how the minimum wage rise in April could impact your staffing costs and whether adjustments to pricing or staffing levels might be necessary to maintain profitability.

2. Optimise workforce costs

• Review staffing needs: Assess your workforce structure to identify opportunities for cost savings, such as reallocating tasks or consolidating roles.
• Flexible working arrangements: Consider part-time, remote, or freelance options to reduce fixed payroll costs without sacrificing productivity.
• Invest in technology: Automation tools can streamline administrative tasks, improve efficiency, and reduce reliance on manual labour.

3. Tighten credit control policies

• Streamline payment terms: Encourage faster payments from customers by offering small discounts for early settlement or implementing late payment penalties.
• Automate invoicing and adopt e-invoicing: Use software to issue invoices promptly, reduce delays and improve cash flow. E-invoicing enables invoices to be sent in a standardised electronic format, allowing key information to be automatically integrated into the buyer’s accounts payable system - eliminating manual data entry, reducing errors, and speeding up payment processing.
• Monitor accounts receivable: Regularly review outstanding invoices and proactively follow up to reduce the risk of bad debt.
• Utilise a standalone credit control facility: Outsourcing credit control can improve collection efficiency, reduce late payments, and provide greater certainty in cash flow management, freeing up your time to focus on growing your business.

4. Leverage invoice finance products

• Access immediate working capital through invoice finance: Businesses can release up to 90% of the value of unpaid invoices within 24 hours. This can help bridge cash flow gaps during periods of rising costs.

5. Maximise returns on business savings

• Review savings accounts: Compare business savings accounts to ensure they offer competitive interest rates. Even small increases in returns can make a big difference over time.
• Consider higher-yield options: Explore notice accounts or fixed-term savings if you can set aside funds for a longer period. These often provide better returns than instant-access accounts.
• Build a cash buffer: Focus on gradually building surplus cash to act as a financial safety net for future challenges or growth opportunities.

A call for awareness and preparation

John Atkinson, Head of Commercial and Strategy at Novuna Business Cash Flow, commented:

“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.”

With increases coming into effect in April 2025, businesses should act now to review their financial strategies, forecast future costs, and implement measures to maintain stability and growth.