Dawsongroup | finance

Rising inflation – how we can mitigate the impact on your business

Inflation jumped a whopping 1.2% in August to 3.2% – the highest it has been in almost a decade and well above the Bank of England’s 2% target. While business and consumers will certainly already have been aware of price surges in recent weeks and months, especially for fuel and construction materials, the scale of this sudden hike may still come as a worrying shock.

After such a lengthy period of low inflation the sting is inevitably being felt by businesses of every size and across virtually every sector who have grown used to the status quo. Not only that but the sudden rise, which confounds the central bank’s earlier assurances that price rises would be temporary and manageable, may herald further inflationary pressure through the rest of year and even beyond it, as many forecasters now predict.

How can high inflation affect my business?

The impact wrought on your business plans by inflation can be massive – you only need to consider how hard soaring natural gas prices are now hitting energy companies for a case in point.

This is a time of increasing costs, smaller profit margins, and often higher prices for your own customers. While some businesses may be better placed to absorb the hike in their costs, others will now need to take action to safeguard their businesses, especially if their margins are small or they want to avoid passing on the rises to their own customers.

That’s where asset finance can come in.

Asset financing and inflation

At times like this when working capital can grow scarce, seeking financing for any new assets offers a useful benefit of allowing companies to conserve what they have. They can even free up cash that is locked away by refinancing the assets they have. You may even want to seek finance to fund bulk purchases of the materials you need, not only safeguarding your future supplies, but also unlocking potential savings and economies of scale.

The good news is that this inflation goes hand in hand with a return to growth in many sectors after the turbulence of the pandemic and its lockdowns, and equipment financing can be even more attractive as companies seek to fuel expansion and take advantage of the opportunities the recovery can deliver.

Inflation, as we’ve already set out, is notoriously hard to predict, and good working capital can help your business remain robust and agile in the months ahead. Now is the time to make sure your productivity is maximised and your business is equipped with the tools and resources it needs for that to be so.

It might be worth having a conversation with us now with a view to future financing options – it makes sense to get plans in place now so if inflation continues to rise, you’re prepared to react quickly and decisively.

If you want some guidance around how we can help you finance the assets you need and help your business stay in good shape in the face of rising inflation, get in touch with the Dawsongroup Finance team on: info@dgfinance.co.uk or by calling 01425 474070.