The Cost Of Living Crisis & Business Impact
The Office for National Statistics has released information about the rising cost of living and the ongoing cost of living crisis. These statistics cover the period November 2021 to March 2022.
The statistics were released today (25th of April 2022). You can read them here.
As you will likely expect, the vast majority of adults are experiencing an increase in the cost of living, primarily an increase in the cost of usual household bills and in particular energy bills, the price of food and the price of fuel.
These statistics also show that more people are borrowing money or using credit than they were a year ago. The expectation is that people will be saving less and borrowing more in the short to mid term. It has also recently been reported that people are cutting back on subscription services such as Netflix, as people have to make difficult choices as to how to spend the limited funds they have available.
Although these statistics focus upon individuals, it is likely to have a similar impact in relation to businesses. The expectation is therefore that businesses may be slower in paying invoices and perhaps seek more generous payment terms. The risk is therefore that businesses providing goods and services may find themselves being owed more money and receiving payments less quickly. The obvious impact of this will be on cash flow and also the risk of customers failing to pay at all.
We always encourage our clients to keep a careful eye on their cash flow and behaviour of customers. Prevention is always better than the cure in terms but where invoices are outstanding and overdue, you should ensure that you take swift and effective action to recover payments.
Our courses enable you to do that.