Figures from the Q3 survey show that both the manufacturing and service sectors are showing good increases in domestic sales, reporting 63% and 34% rises respectively. Indeed, this is reflected (although not quite as strongly) by the improvement in orders that these sectors have also enjoyed. Manufacturing has enjoyed an increase in orders of 50% since Q2, whilst services has seen a steady increase at 32%.
The one blot on this landscape comes from the fact that Manufacturing and Services both saw reductions in their overseas sales in Q3. Manufacturing has suffered the most at a 43% reduction, whilst Services has reduced slightly by 6%. I suppose the fact that domestically things are doing (comparatively) well makes this less worrying, although to see real recovery we do need to see this trend reversed.
I think of great significance is the fact that both sectors reported an improvement in cash flow in Q3. Manufacturing has enjoyed a massive increase of 86%, whilst Services has again been more modest at 16%. As I wrote a few weeks ago following the Manufacturing Matters Conference, things certainly seem to be on the up for many of the regions manufacturers. Lets hope the trend continues!
What will be of great significance over the coming months and years will be ensuring that this increase in confidence is supported by the banks and other financial institutions. There has certainly been a well documented lack of demand in bank finance over the last few years, so the acid for the banks will be coming. Will they be able to meet the rise in demand for cash flow support? NACFB recently released figures of their own showing that the demand for “New types of business finance” doubled from 2012 – 2013 from £0.25 billion to £0.5 billion – the demand is certainly growing. As I have said before though, we should not rely solely on banks. Hopefully the days of UK economy being so reliant on the big high street banks are behind us, and there has been a massive growth in funding options over the last few years. Directors of UK SMEs need to be aware of these so they are able to find the best ways to look after their individual cash flow needs.
As always, Creative Capital are eager to talk to all types of companies about their individual cash flow needs. Selective Invoice Finance can be an incredibly flexible tool to solve short term cash flow issues, and can be used either on it’s own, or to supplement other types of lending.
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