Crossflow’s response to the UK Budget: rising to the challenge to support businesses, cashflow and confidence
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In this post, our CEO Tony Duggan responds to the UK Budget released today.
The Chancellor on building a "bridge for business" and supply chain disruption
Following the Bank of England’s emergency cut in interest rates from 0.75% to 0.25% earlier today, the Chancellor of the Exchequer Rishi Sunak delivered the UK Budget. He balanced a tone of reassurance with practical measures to mitigate the negative economic impact of the coronavirus on UK businesses, consumers and public services.
He said, “I know how worried people are...about their health, their businesses and their financial security. People want to know what is happening and what can be done to fix it. We are doing everything we can to keep our people healthy and financially secure. We will get through this together. We will rise to this challenge.”
The Chancellor noted: “Business supply chains are being disrupted around the globe…For a period, our productive capacity will shrink.”
However, he said: “People will return to work...supply chains will return to normal. Our economic performance will recover.”
We fully support the Chancellor’s commitment to help struggling businesses impacted by the coronavirus.
As he said, “On the supply side, the right response is to provide a bridge for business.”
The Chancellor outlined a £30bn fiscal relief package to support British businesses. He acknowledged that “well-run businesses will face problems with their cashflow. They will need loans to get through this period.”
He introduced the Coronavirus Business Interruption Loan Scheme, with loans of up to £1.2m for SMEs to unlock up to £1bn in working capital. He noted that the government will cover up to 80% of losses so “banks can lend with confidence”.
Why this matters for UK businesses of all sizes and the global supply chain impact
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The current market turbulence and the unknown long-term impact of the coronavirus on the global economy are reasons for concern, especially for UK businesses from large corporates to SMEs.
Fear is rapidly changing consumer behaviour and the markets, so the long-term effects are unknown.
As the Financial Times reports, while companies track their direct suppliers, they “can be blind to their suppliers’ factories, the tier twos and those further down the chain” and Bain & Co. said that up to 60% of executives have “no knowledge of the items in their supply chain beyond the tier one group”.
The coronavirus will have a profound impact on businesses of all sizes, and that is especially true in the UK where leading corporates exist alongside high growth scale-ups and SMEs.
79 FTSE 100 companies have their global headquarters in the UK. FTSE 100 companies employ 6.8m people globally and have a market cap of over £2trn according to the London Stock Exchange. The majority of these companies work with SME suppliers. There are 5.9m SMEs in the UK. The Federation of Small Businesses reports that SMEs account for three-fifths of the employment and around half of turnover in the UK private sector, employing a total of 16.6m people and with an estimated collective turnover of £2.2trn.
How working capital finance can help global supply chains
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Last week in Parliament, as reported by Reuters, the incoming Governor of the Bank of England Andrew Bailey said: “I think it is quite reasonable to expect we are going to have to provide - collectively going to have to provide - some form of supply chain finance in the not very distant future now to ensure that the effects of this shock from the virus are not damaging to many forms of activity… particularly to small and medium sized firms, and we are going to have to move very quickly to do that.”
Crossflow is committed to supporting global businesses and their suppliers with working capital finance. As a UK business based in London, we are especially aware of the immediate and urgent concerns of businesses here and the fact that so many depend upon global supply chains. SME suppliers are under pressure and struggling to survive.
In order to help global businesses support their supply chains and mitigate the negative impact of the coronavirus, we have launched the Bridge for Business programme, enabling businesses to launch an immediate supply chain finance programme and give their suppliers fast access to cash.
We can help businesses access our global network of funders – including banks, alternative investment funds and family offices – and release millions in working capital.
We can help your global business plan, roll-out and manage a working capital finance programme quickly and easily. Your business can free up cash, while also enabling its suppliers (both large and small) to get their invoices paid faster through Crossflow’s platform.
Suppliers can request and receive payments in global currencies online in 48 hours. Crossflow’s secure platform leverages data and automation to drive operational efficiency and speed.
Cash is critical to the survival of businesses – especially SMEs. We are here to help support businesses of all sizes and ensure they can optimise cashflow during this difficult time and rise to the challenge.
Tony Duggan is co-founder and CEO of Crossflow. He served as Supply Chain Director at Wickes and B&Q prior to serving as Product Development Director at SWIFT, the global banking network. He also managed an outsourced fintech development project for HSBC in Hong Kong.