Cash flow

Energy and fuel costs are back on the cash flow agenda

Published 29 June 2026 · 10 min read · By Juno Funding

Energy and fuel costs are not just a profit problem. They are a cash flow problem.

A business can have customers, orders and decent margins, but still feel pressure if electricity, gas, diesel, haulage, refrigeration, heating or transport costs rise faster than cash comes in.

Quick summary

ONS reported that 63% of trading businesses had some degree of concern about energy prices in early June 2026.
ONS also reported that 65% of trading businesses had some degree of concern about fuel prices.
Energy prices were cited by 27% of trading businesses as a reason for considering price increases in July 2026.
Fuel, haulage and transport costs can quickly move through supply chains.
Funding may help where the pressure is temporary, evidenced and affordable.
Funding is dangerous if it is used to hide weak margins or avoid necessary price changes.

The business problem

Energy and fuel costs affect different businesses in different ways.

For a manufacturer, energy may be part of production cost. For a haulier, fuel may be central to every job. For a restaurant, energy affects cooking, refrigeration and heating. For a wholesaler, fuel and transport costs affect delivery. For a care provider, fuel may affect staff travel. For a retailer, energy costs can hit premises, refrigeration, lighting and opening hours.

The problem is that these costs often rise before the business can pass them on.

Customers may resist price increases. Contracts may be fixed. Quotes may already have been issued. Stock may already have been ordered. Suppliers may tighten terms. Staff still need paying. HMRC still needs paying.

That creates pressure on cash.

The business may still be viable, but the timing becomes uncomfortable.

Why this matters now

The latest ONS business survey data shows energy and fuel costs remain high on the list of business concerns.

That matters because cash pressure rarely comes from one issue alone. It is usually a stack.

A business may be dealing with:

higher energy costs
higher fuel costs
wage increases
business rates
supplier price rises
slower customer payment
stock funding
tax liabilities
existing finance repayments

One extra cost may be manageable. Several at once can change the cash position quickly.

How funding can help

Funding can help where energy or fuel costs create a timing gap rather than a permanent loss.

For example, funding may help a business:

cover a short-term increase in fuel costs while customer prices are adjusted
buy stock before supplier prices rise
pay suppliers on time during a high-cost period
fund payroll while customers pay later than expected
smooth seasonal energy usage
invest in energy-efficient equipment
bridge the gap between a large contract starting and payment arriving
avoid stretching HMRC or key suppliers

Good funding creates room to act. It gives management time to make pricing, operational or supplier decisions without lurching from one urgent payment to the next.

But funding should not be used to pretend costs have not changed.

If energy and fuel costs have permanently reduced margin, the business may need to reprice, renegotiate, reduce overheads or change how it operates.

Borrowing alone will not fix a broken margin.

Funding options to consider

The right option depends on the cause of the cash pressure.

Invoice finance

Invoice finance can help where the business has raised invoices to other businesses but is waiting to be paid.

It may be useful for firms where energy or fuel costs are paid upfront, but customer receipts arrive later.

It can work well for businesses with reliable customers and clean invoices. It is weaker where there are disputes, poor records, consumer sales or concentrated debtor risk.

Overdrafts

An overdraft can provide a short-term buffer for fluctuating energy or fuel costs.

It can work where the business only needs support for short timing gaps.

The risk is that an overdraft becomes permanently used. If the balance never comes down, the business may need a different structure or a deeper review of cash generation.

Short-term business funding

Short-term business funding can help with a specific temporary pressure, such as a seasonal energy peak or a short-term fuel spike.

It can be quick and flexible, but it can also be expensive.

It should be used carefully. Repeated short-term borrowing can become a sign that the underlying business model is not generating enough cash.

Asset finance

Asset finance may help if the business needs equipment that reduces energy use or improves efficiency.

Examples include machinery, vehicles, refrigeration units, production equipment or energy-efficient assets.

This can be sensible where the asset helps reduce cost, increase output or improve reliability. It is a poor fit where the equipment does not produce a clear financial benefit.

Stock or trade funding

Some businesses buy stock earlier to avoid expected supplier price rises or supply disruption. Trade finance can help, but stock funding carries risk. Stock ties up cash. Demand may soften. Products may become obsolete. Storage costs may rise.

Buying more stock is not always a strategy. Sometimes it is just cash trapped on shelves.

When funding works well

Funding may work well when:

the business has a clear reason for needing it
the pressure is temporary or manageable
the business has evidence of future receipts
margins remain strong enough after higher costs
management accounts are current
supplier and customer terms are understood
there is a realistic repayment plan
the cost of funding is lower than the commercial benefit

Funding can be sensible if it protects a profitable order, avoids missed supplier payments, supports a seasonal peak or helps the business invest in efficiency.

Where it can go wrong

Funding can go wrong when:

the business borrows because prices have not been increased
costs have permanently risen but margins have not been reset
the facility is used to pay old arrears rather than fund future trading
the business is already using HMRC or suppliers as unofficial credit
repayments are based on optimistic sales
energy or fuel price movements are not stress tested
the lender can reduce availability if performance worsens
directors sign personal guarantees without understanding the risk

The danger is simple.

If a business borrows to cover higher costs but does not improve margin or cash conversion, the debt remains after the cash has gone.

Costs, risks and watch-outs

Business owners should look beyond the headline interest rate.

Funding costs may include:

interest
arrangement fees
service fees
monitoring fees
valuation fees
legal fees
early repayment charges
exit fees
default interest
broker commission
minimum monthly charges

Security may also be required. This could include a debenture, asset security, invoice assignment, property security or a personal guarantee.

The more stressed the business looks, the more questions the lender is likely to ask. That is not unfair. A lender needs to understand whether the business is dealing with a timing problem or a deeper trading problem.

Questions to ask before signing

Is this a short-term timing problem or a permanent margin problem?
What is the total cost of the funding, including all fees?
How will the facility be repaid?
What happens if energy or fuel costs rise again?
What happens if customers reject price increases?
What happens if sales fall?
Is a personal guarantee required?
What security is required?
Can the lender reduce availability?
Are there exit or early repayment fees?
What financial information must be provided each month?
What would put the facility into default?
Would repricing, supplier negotiation or cost reduction be better than borrowing?
Is this funding supporting growth, resilience or survival?

What lenders will check and why

Lenders will want to know whether the business can afford the funding. If you want the reasoning behind each request, see why lenders ask the questions they ask.

They may ask for:

recent bank statements
management accounts
filed accounts
aged debtor reports
aged creditor reports
VAT returns
energy bills
fuel cost records
supplier contracts
customer contracts
current borrowing details
HMRC arrears position
forecasts
Companies House filings
details of existing security

This is not just paperwork. It shows whether the cost pressure is real, whether the business has understood it, and whether repayment is realistic.

A lender may also want to see whether management has taken action. That could include price increases, contract reviews, supplier negotiations, cost controls or energy efficiency planning.

A business that can explain the problem clearly will usually look stronger than one that simply asks for cash.

Practical cash flow actions before borrowing

Before taking finance, businesses should consider:

updating the 13-week cash flow forecast
separating fixed and variable energy costs
reviewing fuel usage by job, route, contract or vehicle
checking whether customer prices still cover delivery costs
reviewing supplier payment terms
checking contract clauses for price variation
identifying customers with slow payment habits
reviewing stock levels
checking HMRC payment dates
modelling a further 10% or 20% cost increase
agreeing what costs can be passed on and when

Funding decisions are better when they sit inside a wider cash plan.

The Juno view

Energy and fuel costs should not be treated as background noise.

For many SMEs, they affect pricing, margin, supplier payments, payroll and the timing of cash. They can turn a profitable month into a tight month.

Funding can help, but only where it solves a real commercial problem at a cost and risk the business can afford.

The practical test is this: are you using funding to buy time for a clear plan, or are you using it to avoid making a decision?

If the business has good records, realistic forecasts and a clear route to repayment, funding can create breathing space.

If the business has weak margins, poor records and no plan to deal with higher costs, more borrowing may simply add pressure.

Good funding creates room to act. Badly matched funding creates pressure.

Sources and further reading

This article reflects current Juno Funding editorial. Funding products, rates and lender appetite change frequently — figures are indicative only and should not be treated as advice.