UK employment is at a record high. The most recent Office for National Statistics (ONS) data found that the rate of unemployment was only 3.9% between December and February – the lowest figure since 1975.
In Wales, however, the rate of unemployment currently sits at 4.5%. While that’s still a positive figure for the Welsh economy, with more than 1.5 million people currently in work, the nation remains behind the rest of the UK.
It was therefore encouraging to see the latest Lloyds Bank Business Barometer report that a net balance of 30 per cent of Welsh businesses plan to increase their staff levels over the next year.
Investing in new staff is great for business. It can boost the morale of existing employees, give companies the resources needed to grow and unlock fresh approaches that encourage innovation.
The initial expense of hiring new workers, however, can be a costly hit. Failure to prepare a company’s finances ahead of a recruitment drive can cause difficulties if the business doesn’t put the right steps in place.
In most cases, new employees will need adequate time to embed themselves into a company and to learn the processes or skills needed to do the role. Creating new jobs often requires the purchase additional equipment too, like extra computers or protective clothing.
All of this means a company may not reap the financial rewards of increasing its headcount for several months. This is where flexible short-term finance options can help.
One solution is invoice finance. This allows firms to release up to 90 per cent of the value of an invoice, usually within 24 hours, unlocking cash that can be deployed elsewhere in the business – for example, to purchase new equipment or invest in new products and services.
Given that an uptick in orders can lead to an increase in the number of invoices issued, invoice finance can be particularly valuable to firms looking to increase their headcount in response to a surge in new business.
To cover the cost of new equipment or machinery needed to facilitate headcount growth, tools like asset finance can help. This allows firms to spread the cost of an investment over the life of the asset, such as a new vehicle, and means firms can cover the large upfront cost while protecting their cash flow and leaving the funds for future investment.
It is also worth exploring other support that’s available to help businesses as they grow and take on more staff – for instance, we’ve pledged to lend up to £1.1 billion to Welsh businesses during 2019 to help them achieve their growth ambitions.
There’s no doubt that the initial cost of increasing a business’ headcount can be daunting, but the benefits can far outweigh the challenges and firms should not allow the upfront cost of recruiting to get in the way.
David Beaumont is regional director for Lloyds Bank Commercial Banking in Wales