< Previous20 Business Link www.blmforum.net INVOICE AND FINANCE SOLUTIONS responsible directors at non-compliant companies who don’t report their payment practices could face criminal prosecutions including potentially unlimited fines and criminal records. By cracking down on late payments the government hopes to unlock growth for 5.5 million small firms by enabling them to invest their time hiring more employees, boosting wages, and exporting around the world, rather than chasing down late payments. As we wait to see how effective the government’s measures will be, businesses are left to put in place structures to mitigate late payments, ensuring they use invoicing best practices. While on a basic level this can involve making and agreeing on clear payment terms with clients before work begins, completing credit checks on customers to flag potential problems, using professional invoicing software, automating invoicing and follow up, offering multiple payment options, and introducing late payment charges, there is only so much a business can do to encourage a client to pay on time. For some businesses, then, invoice finance becomes a necessary lifeline. Invoice finance helps businesses bridge the gaps in between providing goods and services and being paid. It involves lenders using unpaid invoices as collateral for funding, giving businesses rapid access to a percentage of the value of those invoices, usually within 24 hours. Upon taking out an invoice finance facility, businesses can assign some or all customer invoices that are currently outstanding to the finance provider. They will then have access to up to 80 or 90 per cent of the value of those invoices, with the remaining 10 or 20 per cent (minus the finance provider’s fees) made available upon payment of the invoices by the business’s customer. Invoice finance is a good way of unlocking working capital quickly and improving cashflow, which can be critical to daily operations, payroll, amongst other costs. There are two main types of invoice finance to consider. With invoice factoring, a finance provider will advance up to 90% of the value of invoices almost instantly (determined by the quality of the businesses owing money and the likelihood of invoices being paid), overcoming the 30 day, 60 day, or longer wait for payment by customers. It will also manage your sales ledger and be involved in collecting payment for invoices direct from customers. In this © stock.adobe.com/Andrey Popovwww.blmforum.net Business Link 21 INVOICE AND FINANCE SOLUTIONS case customers will likely know that a business is using a factoring provider, which could impact relationships (especially if the provider you use employs aggressive collection methods), and the service fee percentage will generally be higher due to the sales ledger management support. Invoice discounting works in a similar manner to factoring, with the finance provider lending up to 90% of the value of invoices almost instantly. However, invoice discounting (more often used by established businesses with larger turnovers) is finance-only, without the additional sales ledger management and collection activity, and the service fee percentage will generally be lower. Other types of invoice finance are also available, with selective invoice financing for example presenting the flexibility to finance selected customer accounts, while spot factoring provides the option to finance distinct invoices. In difference from factoring and invoice discounting these options do not necessarily provide ongoing finance, instead offering the choice of deciding which invoices to finance while managing the remaining ones as normal, making them helpful for firms with occasional working capital needs. Which form of invoice financing to choose will depend on a business’s size, situation, requirements, and preferences. By using invoice finance, with unpaid invoices as collateral, businesses can capitalise on an often-unused asset on a balance sheet and rely less on other forms of security, protecting assets. There is also usually flexibility to how you spend the money in your business, so long as it is used to run it, whether it is utilised for inventory, staff, or other activities. Invoice finance is additionally a scalable option, with more funds available as business turnover grows, and can work well next to other lending facilities, whether they be term loans or asset finance. Of course, invoice finance has its disadvantages too, such as being held responsible if customers fail to settle invoices, loss of control and an altered view of your business by clients where invoice factoring is concerned, typically strict eligibility criteria, and potentially costly interest rates and processing fees. With late payments harming businesses across the country, firms are left burdened with the need to find a method of overcoming this ever-present challenge, before becoming one of the tens of thousands of businesses forced to close a year as a result of the problem. 22 Business Link www.blmforum.net ENGINEERING efficiency The engineering and manufacturing industries in the region have been undergoing significant transformations in recent years. © stock.adobe.com/jeson Engineered DIRECT GASKETS LIMITED For 35 years we have been market leaders in the manufacture of Gaskets. Here at Direct Gaskets we aim to be versatile in our company. We supply gaskets – bespoke and standard – to all types of businesses. Contact us today on 01482 219655 or visit our website www.direct‐gaskets.co.uk Units 26 ‐ 36 | Dansom Lane South Hull | HU8 7LA Email: info@direct‐gaskets.co.uk www.blmforum.net Business Link 23 ENGINEERING In the face of rising energy costs, combined with government pressure across all industries to reduce greenhouse gas emissions, a large focus over recent years has been innovating ways to reduce emissions whilst performing everyday tasks. One of the prominent trends driving the UK engineering and manufacturing industries is the integration of advanced automation and digital technologies, including AI. The concept of Industry 4.0, characterized by the fusion of cyber-physical systems, automation, and data exchange, is revolutionizing production processes and enhancing operational efficiency. Sustainability has become a key focus for the UK engineering and manufacturing industries. As the world grapples with climate change and environmental concerns, businesses are recognizing the need for greener practices. Efforts are being made to reduce carbon emissions, optimize waste reducing reliance on finite resources, and minimizing environmental impact. Additionally, collaboration within supply chains is crucial to optimize material flows, ensure responsible sourcing, and promote circular practices at every stage of production. Ultimately, adopting a circular economy seeks to extend the lifespan of the individual manufacturer, as well as aiding the environment. Reducing waste generation and conserving resources safeguards a company’s operations against government waste reduction sanctions, and allows operations to diversify, thus extending beyond the limited resources available. The transition towards electric vehicles (EVs) is another significant development in the UK engineering and manufacturing industries. The UK government’s decision to ban the sale of new petrol and diesel cars by 2030 has accelerated the demand © stock.adobe.com/Nisit 24 Á management, and enhance energy efficiency throughout the production process. The integration of renewable energy sources and the adoption of circular economy principles are also gaining traction. We can expect further advancements in sustainable manufacturing practices as businesses strive to minimize their environmental impact while maintaining profitability. As alluded to above, the principles of the circular economy are being increasingly utilised, turning traditional linear production models on their head. Circular economy principles aim to minimize waste, maximize resource efficiency, and promote the reuse, recycling, and repurposing of materials. In the context of manufacturing, this involves designing products for durability, easy disassembly, and the recovery of valuable materials. Companies are implementing closed-loop systems, where materials are recycled or regenerated, 24 Business Link www.blmforum.net ENGINEERING for EVs. This shift not only impacts the automotive sector but also drives changes across the entire manufacturing supply chain. In 2023, there was a noticeably increased investment in the production of electric vehicles, including the manufacturing of batteries, electric motors, and charging infrastructure. The engineering industry will play a crucial role in developing innovative technologies to support the growth of EVs, such as improvements in battery performance and charging speed. This transition towards electric mobility presents both challenges and opportunities for businesses as they adapt their manufacturing processes to meet the rising demand for cleaner and more sustainable transportation. Digital transformation is revolutionizing the UK engineering and manufacturing industries. By harnessing technologies such as artificial intelligence, internet of things (IoT), and cloud computing, businesses are optimizing processes, improving product quality, and enabling predictive maintenance. The collection and analysis of real-time data allow manufacturers to make data-driven decisions, reduce downtime, and enhance overall operational efficiency. In the first half of 2024, there has been a concerted effort to further integrate digital technologies, with an increased focus on cybersecurity and data privacy. The adoption of advanced analytics and machine learning algorithms will enable manufacturers to gain deeper insights into their operations and drive continuous improvement. Moreover, the use of digital platforms and collaborative tools facilitates communication and cooperation within the supply chain, © stock.adobe.com/Chaosamran_Studio fostering innovation and agility. The UK engineering and manufacturing industries are experiencing significant developments this year, the effects of which are anticipated to influence the direction of developments for the next 3 to 5 years. From the integration of advanced automation and sustainable manufacturing practices to the transition towards electric vehicles, these sectors are adapting to meet the challenges and opportunities of the modern world. By embracing innovation, driving sustainability, and leveraging digital technologies, UK businesses can position themselves at the forefront of global engineering and manufacturing excellence. The ongoing advancements in these industries contribute to economic growth, job creation, and a more sustainable future for the region. www.blmforum.net Business Link 25 LOGISTICS AND TRANSPORT I t seems inevitable now that AI will become a part of almost every industry in our lives, and logistics is no exception. There have been obvious fears as to AI and its capability to throw up incorrect information and, in people’s minds, this throws up images of an AI- powered sat-nav instructing a truck to plough into a school full of children, the reality is that this isn’t likely to be the way in which AI is utilised. Not only because of the risks associated with it, but because it’s not a very cost-effective adaptation. The usage of AI should be to save money or increase profitability, not to change something that already works just fine. Where AI can be used to great success is in route optimisation and hazard identification – not to spot someone in the road (a human can do that better) but to spot a potential traffic jam or road accident further on the journey, inform haulage teams, and plot out an alternative route to help fleets bypass the 26 Á transport The future of AI is still in its infancy and prone to mistakes, but that doesn’t mean the industry isn’t looking at how best to incorporate it. © stock.adobe.com/ProstoSvet26 Business Link www.blmforum.net LOGISTICS AND TRANSPORT issue. While it’s true a human operator can do this as well, humans are limited by attention span and processing speed, whereas AI can watch hundreds of routes at once and parse information in the blink of an eye. In early stages, discrepancies in routes might be flagged for a human operator to assess, thus removing the risk of mistakes and allowing humans to make the best decisions, but even this is a saving because it takes the onus of scouring hundreds of route maps to spot problems away from the human, allowing them to focus on other tasks. With machine learning, the potential for AI to improve over time is also something that could be exciting when it comes to route optimisation and could be the solution to the fears of incorrect data. At first, AI is bound to throw up sub-optimal suggestions and make mistakes, hence the need for human control, but a machine can simulate tens of thousands of routes in the time a human does one, and repetition and reinforcement of correct planning can help streamline it. This is already being seen in logistics and distribution in the form of warehouses, primarily for identifying and tracking stock and providing up-to-date details and planning for lorries delivering and receiving goods. The less time a lorry spends loading or unloading, the more time it spends on the road, so streamlining these operations via AI can be profitable. Surprisingly, they can also be better for the environment too. It’s not a huge change compared to say, decarbonising vehicles, but route optimisation reduces unnecessary travel time, meaning less road hours and far less Co2 released into the atmosphere. On an individual scale, this will be very small, but over a fleet of 100 vehicles over a full year of operating, the reduction in Co2 would be far more significant. Of course, it’s the initial cost of AI models that many in the industry are finding prohibitive. This is compounded by the relative newness of the technology meaning there aren’t many that know www.blmforum.net Business Link 27 LOGISTICS AND TRANSPORT how to code and use it, which results in AI software engineers having something of a captive market right now. At the same time, generative AI models are giving rise to many less-than-honest companies online who can masquerade as legitimate. This is giving rise to a “wait and see” approach within the industry that may, in time, lead to disaster. Though it may seem an exaggeration, there was also a time when combustion engines and vehicles were new technology, and many logistics companies were still using horsedrawn wagons. At that time, like now, a lot of companies made the decision to stick with horses, believing engines to be too new, too expensive, and too prone to errors or faults. Early adopters went on to become successful powerhouses within the industry while those who hung back were left trying to compete with vehicles using horses. Extreme as the example may be, it shows the potential for loss in those who are prepared to hang back and wait for technology to become more widely available. There are many who are investing with the hopes of becoming pioneers, and those pioneers will reap the benefits. Keeping Your Business Moving Hire, Service & Repairs Commercial Trailer Specialists in Stallingborough, Grimsby © stock.adobe.com/Chlorophylle© stock.adobe.com/MiguelAngel28 Business Link www.blmforum.net HEALTH AND SAFETY © stock.adobe.com/Jadon Bester/peopleimages.com Stress testing Stress testing www.blmforum.net Business Link 29 HEALTH AND SAFETY S lips, trips and falls. These are the common health and safety issues that almost every business will be used to keeping an eye on, and with good reason. The above are the kinds of workplace accidents that can result in big compensation payouts and even loss of contracts and employees. They’re also what a lot of checks form government bodies focus on, and failing those checks can lead to further problems. If a company works in public service, it can even be a loss of business from local councils. However, focusing on the physical health and safety risks is only useful when it comes to preventing physical accidents. There may well be other concerns that should be at the forefront of a manager’s mind. Mental wellbeing and mental health are sometimes seen as controversial by businesses. In the US, there are companies who lose their minds over the idea of a “work-life balance” and try to argue that’s woke or Gen Z or signs of lazy employees. However, stress in the workplace has been a factor for hundreds of years and is by no means nothing new. It’s just that recruitment has gotten a lot more difficult in the last few decades, and a shrinking labour market has meant that companies feel it a lot more when someone leaves due to mental wellbeing, as opposed to before when recruiting a replacement member of staff was easy. Stress and mental wellbeing don’t just result in employees leaving however, and that’s the issue. A lot of people who are suffering from it will stay at a company and keep working, but their performance and productivity will slowly begin to fall. This can lead to situations where employees that were normally excellent workers begin to drop off, and that forces employers to consider how best to replace them – which can be even tricker, given redundancies and employment law – than if they quit in the first place. Though it may be cynical, one can think of employees as machines in the sense that they need constant maintenance. Machines and product lines need to be stress-tested, and they often need to be updated and modernised. You wouldn’t expect a company to run on equipment that’s ten years old as well as you would if it were new, as repeating the same task over and over will When it comes to health and safety, we’re all aware of the need to protect physical health, but mental health can be just as bad for productivity, so protecting against that could be just as important. 30 ÁNext >