The effects of disruption in the Middle East are reaching far beyond global headlines. Rising energy costs, supply chain pressures and tighter cash flow are beginning to affect UK businesses across multiple sectors. For accountants, now is the time to identify the clients most at risk and help them plan ahead.
While many businesses have not yet felt the full financial impact, previous economic shocks suggest there is often a delay before higher costs flow through the supply chain. By the time those pressures appear in the accounts, valuable time may already have been lost.
In her recent webinar, Helping Your Clients Most Affected by Middle East Crisis, Kirsty McGregor explains that rather than waiting for clients to raise concerns, accountants have an opportunity to start the conversation now.
Why this matters now
The disruption to shipping routes and energy markets has created uncertainty around the availability and cost of key commodities, including fuel, natural gas and industrial materials.
According to Kirsty McGregor, the immediate impact may appear limited for many SMEs because they sit several steps down the supply chain. However, increased costs are already working their way through suppliers and distributors.
That means many businesses are likely to experience:
- Higher energy costs as contracts renew
- Increased supplier prices
- Pressure on margins
- Greater working capital requirements
- More uncertainty around borrowing costs
Even if the geopolitical situation improves, many of these costs are already embedded within the supply chain and may continue to affect businesses over the next 12 to 24 months.
Which clients should you review first?
Not every client will be affected to the same extent.
Businesses operating in sectors with high energy consumption or complex supply chains are likely to face greater pressure.
Priority sectors include:
- Manufacturing
- Engineering
- Construction
- Property development
- Retail and wholesale
- Hospitality
- Agriculture
- Transport and haulage
- Automotive businesses
- Businesses supplying these industries
Clients already operating with tight cash flow, multiple short-term loans or existing profitability challenges should also move higher up your review list.
Four conversations to have with every at-risk client
Rather than focusing only on historical accounts, use client meetings to understand what is happening in the business today.
Kirsty recommends concentrating on four key areas.
1. Cost exposure
Start by understanding where rising costs are likely to appear.
This includes not only the client's own energy bills but also the costs being passed on by suppliers.
Questions to explore include:
- When does the current energy contract end?
- Have suppliers already announced price increases?
- Which materials or products are becoming more expensive?
- Are there alternative suppliers available?
Understanding both direct and indirect cost exposure gives clients more time to respond.
2. Supply chain resilience
Availability can become just as important as price.
Encourage clients to review:
- Key suppliers
- Alternative sourcing options
- Products with long lead times
- Any reliance on overseas supply routes
The earlier potential shortages are identified, the more options businesses have.
3. Cash flow capacity
Cash flow remains one of the strongest indicators of resilience.
Review:
- Working capital requirements
- Debtor collections
- Creditor management
- Existing borrowing
- Whether current facilities remain appropriate
Some businesses may have accumulated several small lending facilities over recent years. Consolidating unsuitable borrowing into a more appropriate facility may improve cash flow, although any funding decision should be based on the client's individual circumstances.
4. Banking covenants
Clients with larger lending facilities should review whether rising costs could affect financial covenants.
Potential pressure points include:
- Interest cover
- Profitability ratios
- Liquidity measures
- Other lender reporting requirements
Identifying potential breaches early gives clients more opportunity to speak with lenders before problems develop.
Don't wait for clients to ask
One of the strongest messages from the session was that many owner-managed businesses are simply too busy running the business to step back and assess future risks.
Often, the greatest value an accountant provides is not having all the answers immediately.
Instead, it is asking the right questions.
Simple discussions around pricing, supplier costs, funding and cash flow can help clients identify issues before they become significant problems.
Looking beyond the downturn
Economic uncertainty also creates opportunities.
Businesses that adapt early, improve cash flow management and make informed decisions are often better positioned when conditions improve.
For accountants, this is an opportunity to strengthen client relationships by moving conversations beyond compliance and towards practical business advice.
Helping clients understand today's risks—and preparing them for tomorrow's opportunities—can make a meaningful difference during periods of uncertainty.
FAQ: Helping Clients Affected by the Middle East Crisis
How could the Middle East crisis affect UK businesses?
According to the webinar, disruption to shipping routes and energy markets is expected to increase costs for many businesses over time. Although many SMEs may not feel the impact immediately, higher energy prices, increased supplier costs and supply chain disruption can gradually affect profitability and cash flow. Businesses further down the supply chain may experience these effects several months after the initial disruption.
Why should accountants be discussing this with clients now?
The webinar argues that accountants are often in the best position to identify risks before they become financial problems. Rather than waiting for year-end accounts, firms can help clients review current trading conditions, rising costs and cash flow pressures while there is still time to take action.
Which clients are likely to be most affected?
The session identified several sectors that may face greater exposure due to higher energy use or complex supply chains, including:
- Manufacturing
- Engineering
- Construction
- Property development
- Retail and wholesale
- Hospitality
- Agriculture
- Transport and haulage
- Automotive businesses
Clients operating within these sectors may benefit from earlier financial reviews.
What are the main financial risks businesses may face?
The webinar highlighted four broad areas:
- Rising energy costs
- Increased supplier prices and supply chain disruption
- Cash flow pressure
- Potential increases in borrowing costs if inflation remains elevated
The speaker noted that many of these pressures may emerge gradually rather than immediately.
What should accountants review during client meetings?
Kirsty McGregor recommends focusing on four practical areas:
- Cost exposure – reviewing direct and indirect increases in energy and supplier costs.
- Supply chain resilience – identifying suppliers or products that could become more expensive or difficult to obtain.
- Cash flow capacity – assessing liquidity, working capital and existing borrowing.
- Banking covenants – checking whether rising costs could affect lending agreements.
These conversations are intended to help clients identify potential risks before they become urgent.
Why is cash flow likely to become more important?
The webinar suggests that higher operating costs may reduce profitability while increasing the amount of working capital businesses need to trade. Businesses with limited cash reserves or multiple borrowing facilities may become more vulnerable if costs continue to rise.
Should businesses review their existing borrowing?
The session recommends reviewing whether current borrowing arrangements remain suitable. Some businesses may have accumulated several separate lending facilities over recent years. Where appropriate, discussing funding options early may provide greater flexibility than waiting until cash flow becomes critical.
The webinar does not recommend any specific funding product, as suitability depends on individual business circumstances.
How can accountants identify clients who may need support?
The speaker recommends reviewing the client portfolio for businesses that:
- Operate in higher-risk sectors
- Have experienced declining profitability
- Are already managing tight cash flow
- Hold several short-term borrowing facilities
- Have lower business credit scores
- May face significant increases in energy or supplier costs
Prioritising these clients for proactive discussions may help identify issues earlier.
What role do business credit scores play?
The webinar explains that business credit scores have become increasingly important when lenders assess borrowing applications. Maintaining good payment performance with suppliers and filing statutory information consistently may contribute to stronger credit profiles.
The webinar did not provide comprehensive guidance on how credit scoring models operate, so businesses should seek specialist advice where necessary.
What practical value can accountants provide during periods of uncertainty?
The webinar argues that accountants add value by helping clients ask the right questions rather than simply reporting historical results.
This includes:
- Reviewing current trading conditions
- Discussing future cash flow
- Assessing funding requirements
- Challenging assumptions
- Helping clients plan for different scenarios
These discussions can support better-informed business decisions during periods of economic uncertainty.
Is every business likely to be affected in the same way?
No. The webinar emphasises that the level of impact will vary depending on the client's sector, cost structure, supply chain and financial resilience. Some businesses may experience only limited disruption, while others could face more significant pressure over the coming months.
What is the key message for accountants?
The central message from the webinar is to engage with clients before financial pressures become visible in the year-end accounts. Early conversations about costs, cash flow and resilience may help businesses respond more effectively to changing economic conditions.
The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article. The information at the time of publishing was accurate and could be subject to final changes.
