Sustainable Development, Finance and Innovation 

With Lee Dinsdale, Managing Director of Logros Advisory Partners

A review of news in relation to sustainable development, finance and innovation and how this can relate to SMEs 

Can you get finance on an electric car?

The benefits of electric cars are widely known, lower running costs, cleaner air and fewer emissions. Although the UK ownership is up 50% the two barriers remain, charging and affordability

One of the biggest challenges in increasing the adoption of EVs is obtaining finance. As the market for second hand EV cars is still in its infancy it is harder to predict depreciation keeping finance costs higher. In terms of installing charging points, installers have to make a decision that adoption is going to happen and therefore increase the number of charging points in the area and therefore give consumers the confidence to proceed with their purchase. 

What is a sustainability linked-loan?

The Green Finance Institute has been recommending utilization linked loans which are an innovative loan solution tied to the performance of a product or service that is focused on sustainability. In the case of charging points this means the financial risk is reduced at the start of the loan. 

New research shows that SMEs are now actively seeking finance to boost their sustainability with many brokers seeing increases in ‘green enquiries’ which include upgrading inefficient machinery, buying electric vehicles and upgrading their existing premises to be more ‘green’ all of which can reduce monthly outgoings improving cash flow in these uncertain times

However, it’s the significant upfront cost of these projects that Leaders of SMEs can often delay and therefore important that SMEs are supported with finding the right finance to help fund green projects. 

This correlates with a research from Novuna Business Finance who polled 1027 SMEs and the most popular sustainability projects are focusing on products and services that are both profitable and environmentally friendly, investing in staff training and reducing waste and packaging. Although different sectors have different focuses.

How can supply chain management improve cash flow?

This is despite the backdrop of rising costs across all areas which is affecting SMEs. A recent survey by Equals Money reported that many firms are now reporting issues with cash flow caused by rising energy prices, supply chain issues with late payment by suppliers and customers and the impact of a decline in customer demand.

The majority of those surveyed are now taking action to mitigate further financial pressure which includes reviewing current supplier relationships, spending and budget analysis and switching financial providers for better rates. 

How SMEs manage the supply chain in terms of cash flow is crucial for businesses wanting to transform, grow and scale. Really focusing on inventory management can make the difference but accurate data and information is vital to balance the demand and supply factors. It is also super important that both sales and operations work closer together. 

Before supplier payment terms are extended it is worth reviewing the importance of the supplier to the business and the possible supply risk.

The pressure on cash flow does mean SMEs have options of seeking cash flow finance to support the company during uncertain times, asset finance for purchases of equipment or machinery and reviewing their commercial mortgage arrangements if wanting to refurbish their premises. Often the barriers for SMEs can be they don’t have the time or are unsure where to go for the right product. 

At Logros Advisory Partners we can help businesses with finding the right solution