The confidence of UK businesses is slowly dwindling as wave after wave of challenges batters the economy.
A recent study conducted by fintech lender Nucleus Commercial Finance found that 66% of UK SMEs are worried about rising costs over the next 12 months. This figure increases to 74% among small businesses.
Rising costs pose a significant threat to these businesses. The increase in inflation is growing at an unprecedented rate, confusing how best to handle the added strain on cash flow.
“When you read about the rising costs in the news, it feels like it’s the same for everyone,” said Chirag Shah, Founder, and CEO of Nucleus. “It’s not. If you’re a transport business, energy is critical. The price of gas determines a lot of things. But that’s one of the biggest cost bases. At the same time, we see many sectors where energy prices have a low impact.”
“Overall, I think it’s more challenging than it was six-nine months ago, but it depends on what sector people are in. There are certain sectors that are really suffering right now. But at the same time, there are sectors which are benefiting from the situation.”
Businesses that have already cut costs and increased prices may be at a loss as to the best course of action in the future. Uncertainty about how much the costs will continue to rise and for how long, clear insight into businesses could be critical.
Pulse provides insight for SMEs
Nucleus has developed its Pulse data tool to assist businesses in gaining this insight.
Pulse uses data to formulate insight reports for businesses free of charge. Companies can upload data to the tool, presenting the data in a readable format with actionable insights.
Shah explained that in the past, when businesses applied to Nucleus for lending decisions, they would share data which is then assessed for approval.
“They provide us access to a lot of relevant business data, and we come back with quick lending decisions,” he said. “The majority of our applications are analyzed in seconds, because of the data access they have provided. And over the last two years, one thing we have realized is that while we are giving a quick lending decision, there is so much more value we can add to the SMEs.”
Businesses accumulate thousands of data points. However, the data’s use may only be evident when presented in a form that can show actionable insights. Shah likened the process to trying to find a word and being presented with a dictionary that had been ripped into loose, scattered pages. He explained that within this analogy, the dictionary could be ordered and bound by the insight tools of Pulse and then highlighted to show the critical factors.
The first phase of Pulse aims to provide these insights to businesses once a month to assist in the decision-making process essential to business success.
AI and machine learning lead the way
Pulse is fundamentally powered by AI and machine learning, which provide real-time insights and analyze the most pressing challenges for the business.
From now on, Nucleus is building additional tools to predict future challenges.
“Currently with Pulse, we are providing historical data for businesses in a snapshot that provides a quick summary of business performance. With phase two we will analyse trends, highlight potential issues that might come up which the SME needs to look at over the next month, next three months, or in six months’ time. That’s where the predictive element comes in.”
“Based on the business performance, we can try to show them any potential pitfalls that might be coming up, so they can start planning actions now.”
This foresight could be critical for businesses as challenging conditions continue, with many predicting even higher inflation levels as the year ends.
Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.
Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.