Challenges facing the waste/ recycling industry in 2023

The current economic pressures have made trading in all areas of business tough, there is no business that won’t have been affected by our economy at present, but as most business owners in the waste and recycling industry know, with the inflationary costs building, 2023 is set to be another challenging year.    

Rising energy costs and fuel price increases are just a couple of the factors making it difficult to do business in this industry. However, there is help at hand in terms of finance for waste management companies, let’s explore in more detail some of the challenges facing waste and recycling business owners and ways to help into 2023. 

What are the challenges facing the waste and recycling industry? 

Chinese import ban of recyclable waste. 

Due to the globalisation of business, growing consumerism, and an increasing level of plastic in the UK, we turned to China for help in our recycling and waste management, by shipping tonnes of recyclable plastics to China. However, a few years ago China placed a ban on imports of recyclable waste into the country due to an overwhelm of recycling waste from all over the world. With insufficient resources in the UK to process our own recycling waste, companies are facing increasing costs to store and sort their waste, leaving UK waste management businesses facing many obstacles that will have a real impact on cash flow. 

Fuel price increases and a ban on red diesel. 

Over the past few months, increasing inflation has forced oil companies to sell fuel at a higher cost, also the war between Russia and Ukraine is impacting the fuel supply and its prices. To cover these costs, waste, and recycling companies are having to hike up their prices too. The government has also placed a ban on red diesel in its efforts to curb CO2 emissions, however, the waste and recycling industry still relies heavily on fossil fuels to run their services and the use of renewable energy instead of red diesel is costly. 

Waste and recycling services are in high demand. 

As life got back to normal after multiple Covid lockdowns, it seems many homeowners and business owners wanted to upgrade their homes and workspaces as construction services saw a surge in demand. However, with increased demand for construction comes increased demand for waste and recycling services. Construction companies rely heavily on waste management to dispose of their waste. This demand increase has made it difficult for waste and recycling businesses to serve their increasing client base. 

Further to travel to waste transfer stations and landfill. 

Waste and recycling businesses rely heavily on waste transfer stations as storage before the waste is recycled properly and with landfills filling up faster than ever before in the UK, waste removal companies are having to travel further to seek waste transfer stations and landfills that can accept further waste. The further they must travel, the more they must spend on fuel, therefore the higher the cost of their services. 

A rise in energy costs. 

To meet UK and EU sustainability targets, waste that would have historically been bound for landfill is now, thankfully, headed for recycling plants and while recycling reduces the amount of energy needed to make products from raw materials, the cost of recycling the products in the first place, lands on the waste and recycling companies. The rise in energy costs at present is having a knock-on effect and putting extensive pressure on the waste and recycling industry. 

Rising waste export costs. 

With the option of exporting waste and recycling to China no longer available, the UK is having to lean on other countries for help with our waste management. Sweden and The Netherlands are major destinations for a lot of UK waste, however, since 2020, the Dutch government has implemented a charge of 32 euros per tonne on waste import taxes. Due to this, profits within the waste and recycling industry are extremely strained. 

How finance for waste management and recycling business finance can help.

While there are many challenges ahead for waste and recycling business owners, there are ways to help ease the financial burden and cash flow issues, business finance being a great solution for this. Let’s have a look at some of the funding options that can help in the waste and recycling industry: 

Invoice Finance 

Invoice finance could be a great solution to help manage your cash flow by bridging the gap between the point at which you make a sale and the time at which the payment is received from the debtor. In this strained economic climate, it could take months for some companies to settle what they owe to you, leaving your cash flow strained but with invoice finance, you can avoid the usual wait and get most of the cash owed to you immediately. 

Asset Finance 

Asset finance allows companies within the waste and recycling industry to continue to grow by acquiring much need equipment and machinery, without having to pay upfront. Instead of buying the asset outright, you will pay a regular amount to use the asset over an agreed period, avoiding the financial burden of waiting until you have enough cash to pay upfront and allowing your business to grow. 

Business Loans 

This can be a good solution for waste and recycling companies wishing to grow their current business. A business loan advances a sum of money to the business owner and is for their exclusive use, within their business, until it is repaid – with interest – over a set period. So, if you’re considering growing your business, renovating your business premises or have to pay an unexpected bill, such as tax, then a business loan, usually ranging from £1,000 up to several million pounds, could be a good option for you. 

How PMD can help you find the best business finance to meet your business challenges

Speaking with a business finance broker can really help to see your way through any challenges that 2023 may have for your waste and recycling business. It’s understandably tough right now for most businesses, but the waste and recycling sector has been hit hard and here at PMD, we are on hand with clear-cut, jargon-free communication to help with your business finance needs. 

PMD works with over 150 lenders and can open several flexible, independent, and competitive funding lines to drive your business forward through these uncertain times.  

PMD takes the hard work out of securing finance for waste management or recycling business finance and liaising with funders on your behalf to ensure the best possible terms are secured, leaving you free to focus on running your business. 

If you work in the waste and recycling industry and are considering business finance options, get in touch today to see how PMD can help. 

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