Finance: More downs than ups for 2023?

By Ben Carey on 1 February, 2023

With the end of the financial year around the corner, we’re taking a look ahead to what the rest of 2023 may have in store.

2022 was full of ups and downs, optimism and pessimism, successes and failures.

Global markets ended a tumultuous year with another month of laboured performance, but on a more positive note, Consumer Price inflation declined at a faster rate than forecast by economists in the UK.

2022 at a glance:

  • Energy prices increased for many companies, although the Government’s Energy Bill Relief Scheme had helped.
  • In manufacturing, output price inflation moderated but remained high as many companies increased prices to try to keep pace with rising input costs.
  • Companies scaled back investment plans due to weak demand, tighter financial conditions and uncertainty.
  • Some businesses continued to invest in automation to counter labour supply constraints.
  • Credit availability tightened as credit risk increased due to the weaker economic outlook.
  • Demand for credit also fell.
  • Bank credit generally remained available for large firms, and lower-risk borrowers
  • Insolvencies continued to rise – albeit from a low base – and trade credit insurance tightened for companies in more vulnerable sectors.

Source: Bank of England Agents’ summary of business conditions – 2022 Q4

So in the midst of an ongoing cost-of-living crisis, what do the financial experts from the region’s business community believe the remainder of 2023 has in store.

The Business Exchange has asked for opinions from three top professionals working in different areas of finance.

Getting access to finance was an interesting arena in 2022. There was plenty of liquidity in the market but quite a lot of lenders became nervous to lend based on a number of economic difficulties during the year.

It seems that the consensus is that 2023 will be a tricky year so getting your finance organised early will be paramount. There seems to be a lot of optimism for 2024, so being able to survive this year and plan for growth in 2024 will be a huge achievement.

Dan Smith, Director, South West Business Finance

Nicki Kinton commercial portrait 2022 taken by Barbara Leatham Photography on March 29th 2022 in Swindon, Wiltshire

At the end of 2022, the will we/won’t we talk of entering a recession was the big headline, and that is set to continue in 2023.

Recession is as much about attitude as it is about macroeconomics. You may have decided not to participate, but others will be worried and cut back on spending and investment.

As such, we will undoubtedly see an increase in business failures in 2023, which will have a knock-on effect down the supply chain. Businesses should revisit and tighten up their processes for granting, monitoring and controlling trade credit to minimise the impact on them.

Nicki Kinton, Founder, Confident Cashflow

After a turbulent few years, particularly for SME businesses, we enter the new year with a cost of living crisis, soaring energy bills, and supply chain issues. But if the pandemic has showed us anything, it’s that SMEs can be adaptable and resilient, remaining cautiously hopeful about a brighter year ahead.

The first thing I advise my clients about at this time of year is tax planning. There are quite a few changes taking place from April that all businesses need to be aware of, as well as opportunities for individuals to make the most of their allowances before the new tax year.

It’s also an ideal time to review your cash management processes. Look at resolving any outstanding invoices to try and offset any upcoming challenges, and see where efficiencies can be made. Our Business Innovation team ensures our clients are using the latest accounting software to give real-time information about your finances.

Ian Lloyd, Partner, Milsted Langdon