After the joyous celebrations of the Queen’s Platinum Jubilee and with preparations for summer holidays in full swing, memories of the impact of the Covid-19 pandemic and lockdowns seem far in the distance. However, is the future as buoyant as we would hope for all businesses?
In spite of the July sunshine, there are a number of significant issues currently causing headaches for UK businesses.
- Inflation levels at a 40 year high of 9.1% in the twelve months to May 2022
- Massive increases in costs for fuel, energy and food, driven by the war in Ukraine
- Repayments and interest charges now applicable for all Bounce Back Loans
- A drop in consumer spending for the second month in a row during May. Sales of clothing and accessories increased as people prepared for the Jubilee and holidays but, according to the British Retail Consortium, sales fell of consumer durable products including furniture and electronics
- Supply chain problems, mostly as part of the fall out from the global pandemic which caused labour shortages and disruption at container ports.
These (and other) issues are all pushing the economy towards the risk of recession later in the year.
Global developments have placed additional stresses on UK businesses and business owners need to take action now to ensure that their businesses not only survive both in the short and long term but prosper in a new economy. Without proper planning and advice, more businesses would be at risk of shutting down their operations.
In terms of the supply chain issues, previous operational processes may have been disrupted, but this should not necessarily mean an end to the businesses. In fact, if acted upon, disruption can have a positive effect and can lead to a fresh approach (perhaps obviating the dependence on certain third parties) which results in greater efficiencies and improved revenue streams. Companies may take the opportunity to become more flexible and resilient, increasing investment in existing and new technology and entering new collaborations.
Directors should also undertake an honest review of their company’s current and future cash flow, as well as the overall financial position of the company. This is particularly important in the current economic environment. I would urge all businesses to conduct a thorough cash flow forecast for their business, considering various trading scenarios in order to identify how they will navigate their businesses through the spiralling economic issues.
Your Client Relationship Director will be happy to guide you through a review of your finances. We can conduct a thorough cash flow forecast for your business, considering various trading scenarios. RPG’s Business Support team can help with monthly bookkeeping services and monthly or quarterly Management Information reports with ongoing cashflow forecasting which will help you keep on top of your finances. We would take the time to ensure you fully understood the reports and exactly what they mean for your business.
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