2023 has been a strenuous year for businesses across Northern Ireland who have been forced into navigating Inflation and adapting to rising costs, challenges with labour availability and ongoing political uncertainty, writes Advice NI’s Sinead Campbell, who shares expert advice for businesses dealing with persistent rising costs.
According to Advice NI, persistent inflation combined with rising interest rates is being cited as the biggest challenge facing business owners. The UK’s inflation rate dropped to 7.9 per cent in June, the lowest it’s been in more than a year. To help slow price rises, the Bank of England announced this week a rise in interest rates from 5 per cent to 5.25 per cent.
Navigating inflation
Sinead Campbell, Head of Money, Debt, and Quality at Advice NI expressed her concern for the local business community, she explains, “Many predict that increase rate increases will slow down as inflation begins to drop, but costs are not coming down quickly enough and we’re seeing businesses grapple with the long-term impact of consistent inflation.
“The Bank of England has raised rates 13 times since December 2021, driving up borrowing costs for millions and although inflation is slowly dropping it remains almost four times higher than the Bank’s official 2 per cent target and far above other developed countries.
“Northern Ireland’s businesses are facing unprecedented financial challenges and as the cost of living crisis continues to reduce customer spending, many business owners feel like there’s no way out. Industries such as the hospitality sector are being hit hard and the unfortunate reality is that we’re seeing closures every week.”
Advice NI is urging businesses to proactively seek support and get in touch with its free, impartial and confidential Business Debt & Money Service advice. Below Sinead shares advice for businesses to navigate their way through these challenging times.
Financial Planning and Budgeting
Careful financial planning and budgeting are essential when navigating Inflation and economic uncertainties. Businesses are encouraged to regularly assess their current financial situation, identify potential risks, and develop contingency plans to adapt to changing economic conditions. One way to mitigate risk is a 12-week forecast including cash receipts versus cash expenditure to determine net cash flow.
Prioritising Payments
If your business is struggling to make repayments, it can be helpful to list your debt and prioritise these. For example, a priority business debt would be your rates and/or rent on business premises, utility bills, HMRC VAT/Tax payments You can categorise non-priority debts whereby the consequence of missing these payments is less severe. Emergency payments should always be prioritised as these could lead to court action, disconnection by a utility provider, loss of an asset or closure.
Operational Efficiency
Businesses should focus on streamlining their operations and optimising resource allocation. Identifying cost-saving measures and exploring new revenue streams, all of which can help mitigate the impact of inflation on profitability. For example, companies can maximise their cash flow by looking for areas to cut back or save such as, negotiating with suppliers on pricing or reviewing their own pricing structure.
Debt Management and Relief
Although ignoring debt may seem like the easy option, this will only lead to further difficulty. If you’re dealing with financial strain or at risk of debt, please don’t face it alone. Our expert Business Debt Advisers are on hand to provide free, tailored and confidential advice that can help businesses gain control of their finances. Advice NI can help businesses navigating Inflation and negotiate with creditors, explore debt relief options, and establish manageable repayment plans.
Advice NI and the Independent Advice Network is made up of 65 members and more than 300 advisers across Northern Ireland. Struggling businesses can call Advice NI on the Freephone helpline number 0800 915 4604 or email [email protected] where they can speak directly with an adviser between 9am and 5pm, Monday to Friday.
Business owners can also browse our website, www.adviceni.net/money-debt/business-debt, for full details of the service, and our Money Talks hub which offers a host of useful online business factsheets, letter templates, as well as tools and budget planners.
