Pleo, the spending solution for small to medium-sized companies has found that only 45% of British businesses are feeling financially prepared to cope with the UK recession as the cost-of-living crisis continues.
Pleo’s research, which spoke to 500 business leaders across the UK, has identified growing concerns for business stability in the UK as leaders feel they aren’t prepared to cope with the knock-on effects of the UK recession.
Speaking to business leaders, two in five (40%) said their clients are making budget cuts, whilst over a third (36%) have said they have seen clients terminating account contracts completely, creating instability, and as such putting huge pressures on leaders as they struggle to navigate wider economic challenges.
Looking ahead, businesses are also experiencing huge challenges with 2023 planning. Nearly half (44%) say they are struggling to set 2023 budgets due to economic uncertainties with the same amount (44%) highlighting a lack of transparency over business spend during 2022 as the reason.
More worrying, the research identified smaller businesses as those who are most concerned about being able to navigate the recession successfully. Only 37% of those businesses with 50 to 99 employees said they feel recession ready, yet when businesses with 250 to 500 employees were asked the same question, half of those surveyed said they were prepared to handle the economic challenges, highlighting a disparity in confidence for different sized businesses.
In addition to wider economic concerns, leaders have also identified issues from inside the business which are causing concern, most notably poor use of financial management platforms.
Of those businesses with multiple offices, over a third (34%) have said they have experienced problems with employees being unable to manage the tools in place. Additionally, 32% said the financial tools in place weren’t compatible together and 31% said the platforms were too complicated and difficult to use.
As such, it’s perhaps not surprising to learn that senior decision makers feel having ‘better access to financial technology’ will be the most important tool to help them navigate the challenges of a recession by improving financial oversight and efficiencies.
With many businesses looking for easy and simple ways to streamline financial management going into 2023, products such as cashback and multi-entity management will provide businesses this much needed support. Over a third (36%) of businesses Pleo spoke to say they would benefit from a cashback initiative to address temporary cash flow shortages; 33% would use the solution to keep on top of energy bill payments and 34% to provide flexibility for emergency payments.
Solutions like these will be critical especially when factoring in UK SMBs are expecting sizeable increases in costs. For businesses with 50 to 249 employees, they are expecting a 12% increase in costs such as energy, travel and rent over the next quarter alone.
Abigail Slater, UK Country Manager at Pleo, said, “With the UK in the midst of a recession, business leaders across the country are continuing to feel the pinch. A number of leaders we have spoken to have said they don’t feel ‘recession ready’ which is of huge concern but the good news is there are solutions out there to help.
“With nearly half of leaders wanting to get a better handle on spend management in 2023, this clearly shows that there is a renewed enthusiasm going into the new year to tackle these issues head-on. The financial support on offer from the Government isn’t going to be enough on its own, so businesses need to do as much as they can themselves to ensure they are fully prepared for the year ahead.
“Nearly half of businesses we spoke to say getting complete visibility of financial health across all aspects of the business will be a core focus, which is why we expect to see solutions such as cashback and multi-entity management being an attractive solution to many of the issues business leaders are facing.”