Rising Inflation: How your business can overcome the challenge

Let’s not sugar coat it.

The next 12 months will be difficult for business owners.

War in Ukraine, an ongoing pandemic and Brexit uncertainty make this a challenging time to lead a business.

But perhaps the greatest test will come from the ongoing sharp rise in inflation, which is predicted to peak at 11% this year according to The Bank of England.

Businesses will not only be impacted directly by spiralling costs, but also by the squeeze on their customers, who are facing a cost-of-living crisis, and a significant fall in real household disposable incomes.

But all is not lost.

There are still things business owners can do now to manage the ongoing rise in inflation.

We recommend the following actions for business leaders…

Maximise the reliefs and allowances you are entitled to

Have you made the most of your Annual Investment Allowance? Have you maximised any available business rates relief? Have you made the most of the temporary Super-Deduction?

If you don’t recognise these terms, or if you need help, then contact our Uncommon Accountants now as there are deadlines for many of the available reliefs.

Identify your core metrics and KPIs

The business owners who will cope best with the uncertainty of the next few months will be those who understand every aspect of their businesses and finances.

Our Uncommon Consultants can help you to identify and track the right KPIs for your business.

And our Uncommon Accountants can prepare monthly or quarterly management reports for you that provide a snapshot of the financial health of your business. You will be able to make strategic decisions based on real-time figures and with all the facts you need.

Review your pricing

Can you sustain your current margins with higher input prices, or do you need to pass down the cost to your customers?

Evaluate your borrowing options

With interest rate rises expected from the Bank of England, consider moving towards fixed rate, fixed term loans.

Re-evaluate the correlation between profits and retaining talent

With increased cost pressures, there is likely to be a lively job market as people seek more gainful employment. You should identify your top performers and consider sacrificing margin in the short term, to retain your best talent for the long term. Our Uncommon consultants can help you with this.

Scrutinise your cashflow

There will be an exceptional demand for working capital in the next 12 months so make sure you have necessary liquidity.

Have a clear cashflow forecast. Review your business’s ability to generate cash and identify quick fixes for your business cashflow. If necessary, develop a personalised cashflow dashboard to improve your cashflow visibility. Our Uncommon Accountants and Consultants can help you manage and improve your cashflow.

This article originally appeared in The Business Post North West Edition 35 p.8 Published in May 2022