The ongoing crisis in the UK’s steel sector, which threatens devastation in towns such as Port Talbot and Redcar, will have lasting effects on a broad range of businesses – and alternative financing solutions will be needed to help ensure these firms survive and return to prosperity, suggests Close Brothers Invoice Finance.
The warning comes following the announcement last week that hundreds of jobs are at risk at the Port Talbot steel plant run by Tata Steel in South Wales. The job losses follow similarly disastrous cut backs in both Scunthorpe and Redcar in recent months.
In towns that have grown up alongside the steel industry, such job losses represent a crisis for the local economy, with every business in the community affected– not simply just those with direct exposure to the steel industry.
“Any business currently supplying products or services to the steel industry is now going to find itself facing real difficulties,” warned David Thomson, CEO of Close Brothers Invoice Finance. “But more broadly, every local business will suffer as people in these towns have less money to spend – from the local high street, restaurants and leisure outlets, to businesses that work directly with these firms.”
While many affected businesses will approach their high street banks for support during these difficult times, Close Brothers believes alternative forms of finance could be more appropriate for firms suffering cash flow problems, or those that are now thinking about how to reorient themselves towards different type of customers.
“These businesses need flexible, tailored financial support provided by firms that are close to the marketplace and can therefore provide more bespoke solutions that are designed for the very specific needs of each business in these towns,” added Thomson. “Alternative finance solutions such as invoice finance will often represent a much more effective solution – used effectively, they could be the key to helping what have been successful businesses get past short-term difficulty so that they can thrive once again.”clos