Interest rates are putting the squeeze on SMB owners. What you need to know heading into 2024.

According to a recent survey from the National Federation of Independent Business (NFIB), small and mid-sized business (SMB) owners are not feeling optimistic about the current economic environment. The NFIB’s Optimism Index was 90.7 points in October, marking the 22nd consecutive month below the index’s 50-year average of 98 – not seen since December 2021.

With 2024 here, SMB owners, like many Americans, remain worried about an impending recession while navigating the effects of inflation and today’s high interest rates. The economy has remained somewhat stubbornly strong with robust consumer buying behavior since COVID-19 lockdowns were lifted. But we have started to see this tide shift recently with retailers like Walmart and Target reporting signs of a more cautious consumer.

Wall Street is Feeling Main Street’s Tightening Pockets

Equipment finance companies should be aware that SMB owners are looking to cut spending, which sends a message across the cobblestone of Wall Street that is important lenders to hear: Main Street has begun tapping the breaks on equipment purchases, expansion plans and software spending in an attempt to hold on to extra capital in the face of a possible downturn in 2024. According to CNBC, Wall Street is on edge with tech companies who specialize in serving the SMB sector; Paycom, Bill and ZoomInfo all saw shares drop double digits since October.

SMBs may be more cautious, but there are solutions equipment finance lenders can provide to help preserve cash so business owners can invest their dollars in the right places

For SMBs, cash is king, and managing cash flow effectively will help a business to meet its obligations, pay its bills, purchase the inventory, supplies and equipment it needs, as well as survive long-term. There are five things equipment finance companies can tell SMBs to look at now in order to safeguard their business throughout 2024:

1. Forecast your cash flow
2. Improve cash flow
3. Manage accounts receivable proactively
4. Manage accounts payable effectively
5. Save and invest excess cash