5 Cash Flow Challenges Businesses Will Face in 2023


Whether or not you believe the economy will tip into a recession this year, you can’t deny uncertainty is the talk of the town—or that it has cast its shadow over business decisions. Both business owners and the professionals who work with them will face a swirl of conditions over the next year, but whatever you are facing, it’s important to remember a business can’t operate or grow without cash flow.

With that in mind, here are five cash flow challenges we think businesses will face in 2023:

1. The end of the Employee Retention Credit
While employers lost the ability to claim an Employee Retention Credit (ERC) for wages paid after September 30, 2021, they could continue to retroactively claim the ERC for 2020, 2021, or both. For the most part, claims expire in 2024.

2. PPP and SBA disaster loan money is gone—even in bank accounts
Businesses benefited from an influx of cash through the Paycheck Protection Program (PPP) and SBA disaster loans (e.g., EIDL). Not only has access to funds disappeared, but savings accounts containing those funds have dwindled or disappeared.

3. More businesses will lose bank loans, and loan workouts will increase
Banks are preparing for a recession. The Federal Reserve continues to raise interest rates, borrowing costs have soared, and consumers and businesses are curbing their spending. As banks tighten their belts, we predict more companies will lose their bank financing or move into workouts, resulting in a cash flow crunch.

4. The return of turnarounds and distressed investing
The goal of a turnaround firm or distressed investor is to improve cash flow so the business will not just survive but thrive. Speed is one of the most important elements of a successful turnaround. Unfortunately, many turnarounds involve outside parties who may have competing interests that slow down the process, consequently slowing down the return to positive cash flow.

5. Funding a business will get more difficult
Faced with more stringent credit requirements and higher interest rates, business owners will find it harder to access the capital they need to run their companies (never mind what they need to grow their businesses!).

Many businesses will likely face cash flow challenges in 2023. Factoring is a tool that can help them stay cash-flow positive year-round. If you know someone who needs help, we can create a tailored solution that will give them the working capital they need to keep their company growing and thriving.

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