Novuna Business Cash Flow, a top provider of financial solutions for SMEs, has analyzed the latest UK budget, which introduces major changes expected to affect businesses nationwide.

The 30 October budget reveals an increase in employer National Insurance contributions from 13.8% to 15%, one of the highest rates in recent history. This hike, combined with a 6.7% rise in the minimum wage for workers over 21 to £12.21 per hour, presents a substantial financial challenge for SMEs, many of which operate on limited budgets.

Employer National Insurance Increase Adds Pressure on SMEs

The employer National Insurance rate had remained at 13.8% since 2011, aside from a brief increase to 15.05% between April and November 2022, which significantly impacted businesses’ financial stability.

Data from the British Chamber of Commerce shows that during the previous rate increase, 81% of SMEs reported negative effects, including reduced hiring, wage freezes, increased service prices, and lower capital investment. This recent increase may push many SMEs to adopt similar cost-cutting measures to stay competitive and solvent.

Alternative Financial Solutions Remain Underutilized by SMEs

Amid rising operational costs, several financial tools could support SMEs through the challenges posed by the budget. Invoice finance, which allows businesses to unlock funds tied up in outstanding invoices, offers immediate cash flow support, though it remains underused among UK SMEs. Novuna Business Cash Flow reports that of the 5.6 million SMEs in the UK, only 34,000 use this option, indicating a need for greater awareness and adoption.

In addition to invoice finance, options like payroll finance and credit protection can help SMEs stabilize cash flow, protect against credit risks, and pursue growth despite financial pressures.

How Financial Flexibility Supported Growth at The Stone Company UK

The Stone Company UK, a leader in bespoke work surfaces, demonstrates how financial flexibility can support resilience and growth. When facing financial strain, the company partnered with Novuna Business Cash Flow to access tailored invoice finance and credit protection solutions. This partnership stabilized cash flow, allowing The Stone Company to increase its monthly invoicing from £400,000 to £600,000–£700,000 and boost lending from £600,000 to £1.3 million. With this added security, The Stone Company expanded its client base, took on new projects, and diversified revenue streams, showcasing how strategic financial tools can help SMEs thrive amid economic pressures.

A Commitment to Supporting SMEs

“With the latest budget changes likely to strain many SMEs, Novuna Business Cash Flow stands ready to support businesses facing increased operational costs,” says John Atkinson, Head of Commercial and Strategy at Novuna Business Cash Flow.

“The partnership with The Stone Company UK highlights our dedication to providing flexible, responsive financial solutions. As SMEs continue to fuel the UK economy, Novuna remains committed to helping them meet financial challenges and build on their success despite economic pressures.”