SME Finance & Pressures on the Finance Director – A practical view for the £5m–£25m turnover business

Across many SMEs in the £2m–£25m bracket, the pressure now feels far more structural than cyclical. We’re speaking to finance directors and business owners who are managing several pressures at once, with margins being squeezed quietly but consistently rather than by one single major issue.

Employment costs continue to rise, particularly with National Living Wage and NI changes now feeding through properly into payroll costs, while energy and wider operational costs remain stubbornly high. At the same time, cash is getting tied up for longer, especially in sectors like construction, manufacturing and logistics where extended payment terms are becoming increasingly common.

We’re also seeing businesses working through fixed-price contracts agreed during 2024 and 2025 which are now absorbing inflation levels that simply weren’t anticipated at the time. Turnover may still look healthy on the surface, but profitability is under growing pressure underneath.

What’s interesting is that the expectation to invest hasn’t slowed down. Businesses still need to fund equipment, automation, AI and operational improvements, while also meeting ESG and procurement requirements just to remain competitive. The difference is that these conversations are now happening in a higher-cost funding environment.

As a result, the conversation has shifted from “can we get funding?” to “how do we structure funding so it genuinely works for the way the business operates today?”

It would be interesting to hear how others are seeing this currently. Is the biggest pressure point right now cash flow, margins, staffing costs, or access to the right funding structure?

For anyone interested, we’ve also put together a more detailed report covering sector-specific pressures and funding structures for SMEs in the £5m–£25m range