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The rise in cost of living is something that is on the minds of people all over the UK. With hard hitting energy bill costs, fuel prices reaching a record high and inflation on the rise, it is a worrying time both for individuals and businesses.
UK businesses have been faced with endless challenges following the pandemic, with continuous lockdowns, increased energy costs and the war in Ukraine all playing a role in the increasing cost of goods and services in the UK.
It was recently announced that the level of inflation could rise to a predicted 11% in Autumn, a significant increase from its current level of 9.4%. This would see the country’s inflation at its highest level in 40 years.
What is inflation?
According to the Office for National Statistics (ONS), the rate of inflation is the change in prices and services over time. Inflation is usually measure by comparing the cost of goods and services today, compared with those from a year ago. The average increase in price is known as the inflation rate. The rate is calculated by the ONS, using three main estimates: the Consumer Price Index, Housing Price Index and the Retail Price Index.
What does this mean for UK businesses?
Whilst the threats of increasing energy costs and inflation are concerning on an individual basis, it begs the question: What do these increases mean for businesses?
Well, the answer is that businesses will certainly have some challenges coming their way. Many businesses may find that the rises in energy costs means cutting down in other areas of the business. Transport companies will be amongst those the hardest hit by the increase in fuel costs, making it a lot more expensive to run their vehicles. It may also be a challenging time for employers to manage worried staff, with news reports showing businesses being forced to make staff cuts to manage the new level of expenses within the business. Businesses may also find that equipment and materials have risen in price, meaning production is more expensive and they may find that the prices of their services need to increase to reflect these changes.
For those businesses that may usually suffer from late payments, such as businesses in manufacturing, logistics, recruitment and wholesale, they may find that these late payments extend further as businesses struggle to gather the funds to pay for orders.
Unfortunately, it is a difficult time for UK businesses and there are a lot of challenging factors that need to be considered and planned for. There are a number of methods that businesses can use to navigate through these uncertain times and a range of support options available to them.
How can we help?
We understand that business journeys aren’t straight forward. There will always be external factors out of a business’s control, which can bring a great deal of challenges for business owners. The health of the economy will always be a large contributing factor to how businesses perform and what their finance needs are as a result. Invoice Finance has always been a solution which can ease the pressure of a fluctuating cashflow cycle. Our solutions are flexible so that our facilities can grow and reduce based on the growth and/or reduction of a business. Having an Invoice Finance facility in place can give businesses the added security of a stable cashflow cycle in times of uncertainty. By reducing the time frame in which they receive their payment, businesses can focus on other areas of the business. Having this upfront access to cash can give businesses the extra support to pay for staff, fuel and raw materials without the worry of late payments.
If you want to find out more about how Invoice Finance can help your business, click here or call us on 0800 085150.
Is Invoice Finance not for you? Find out what other funding options are available on British Business Bank.