A number of SMEs have already reported an improvement in employee engagement, productivity and retention since implementing the scheme. Those businesses that are yet to reach their staging date should be planning ahead to accommodate the increased financial and administrative changes.
Research from the Centre for Economics and Business Research (CEBR) suggests that auto-enrolment set up could cost SMEs between £8,900 and £15,600, depending on their size. The same research predicts that small businesses will need to devote 103 business days to put the scheme into place.
SMEs could face much higher costs proportionally than larger corporations due to the reduced number of employees and resources they may have to help cover the increase in workload. As a result, some companies may find it challenging to maintain a healthy cash flow once the initiative begins.
By planning ahead, businesses can improve their finances through auto-enrolment and benefit from the associated advantages such as increased productivity and engagement from staff.Here are a couple of ways to ensure your business is prepared and that cash flow isn’t an issue when embedding the scheme:
1. Review the operational impact
Between 35 and 40 per cent of SMEs have no plans to review the operational costs of auto-enrolment, but with additional administration required to set the auto-enrolment scheme up, it’s vital that small businesses take these changes into consideration
2. Strengthen your finances
A recent survey suggests that nearly a third of employers still don’t know what auto-enrolment is and of those that do, 70 per cent don’t know their staging date. Without this knowledge there is a real concern that this could see some businesses ‘caught unaware’ and consequently struggling to maintain a healthy cash flow once the initiative is put into place. Seeking out the staging date will provide businesses with the advantage of planning cost impacts of embedding the scheme.
The infographic below looks at the financial and administrative impacts that the auto-enrolment scheme will have on businesses.
To find out how cash flow finance can help you to strengthen your working capital while preparing for auto enrolment, please don’t hesitate to get in touch with the invoice finance team at Aldermore.
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