Ask the experts

Do you have a burning question that you would like the answer to? Or maybe you’re looking for some advice to help your business. In each edition some questions will be shared and answered by some of The Business Bulletin experts.

Q. What precautions should I take as a business owner with the threat of rising inflation?

A. With inflation comfortably above Government targets and showing no sign of slowing down, it’s vital that businesses ensure that their business is robust enough to manage rising prices for their purchases as well as ensure their own pricing is managed to protect their margins without upsetting clients.

Breaking down the individual costs for individual products (as far as is reasonably practicable) can be a useful way of finding out your margin for the particular item, as well as ensuring that you can maintain it with rising costs. Margin management is an underused tool by a significant minority of businesses owners and really should be something monitored on a continuous basis.

It’s always important to also continually monitor your own spending as a business owner but increasingly so in a period of inflationary pressure. It can be a simple exercise such as running through your monthly bank statement with a pencil to ensure that you are not making any unnecessary or duplicate payments as well as contacting utility and finance providers to make certain you are on the best rates and tariffs for your business – ask around, ask your trusted professionals and peers! It can be as simple as that!

In a time of rising inflation, it is likely that the Treasury will strongly consider raising the Bank of England Base Rate, especially as it’s currently at a historically low level. This can have knock-on effects on lending and savings rates so it’s hugely important that the business owner anticipates this before it’s too late.

While there is little a business owner can do to control inflation, there are many actions they can take to ensure that their business is in the best possible position moving forward to survive and grow during an inflationary period.

James Blacklaws JB Commercial Finance

A. Inflation is here for a while as the economy adjusts to the changes to the business environment for the last couple of years. Keeping your eye on cash flow and budgets is key. Both sales prices and costs play a part so ask yourself the following:

1. Are you charging enough, can you charge more?

2. Can you find alternative suppliers that would be suitable and charge less?

3. Can you consume less in terms of raw materials and overheads to save on costs and maintain profitability levels?

4. Can you improve productivity by automating more, for example?

Having robust up-to-date accounting systems and budgeting systems will flag up red warning signs, so finally make sure you have a good accountant as part of your team.

Roger Eddowes Essendon Accounts & Tax

Q. What are R&D tax credits and how can they benefit my business?

A. HMRC state that Research and Development (R&D) relief supports companies that work on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can be for a product or service

R&D tax credits are important tools used to boost innovation and the economy. To qualify the business must be operating as a company, employ less than 500 people and turnover less than 100m euros, about £86m. (For larger companies there is an alternative to R&D tax credits).

Using R&D tax credits companies may offset up to 33% of the R&D costs against their Corporation Tax liability. If the company has yet to make a profit and pay corporation tax it can “cash in” its credits and receive cash from the Treasury instead – useful for fledgling businesses.

We would always recommend using a specialist R&D tax advisor for claims as much can be missed.

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