What rising interest rates will do to your cashflow

MIND YOUR BUSINESS

By Troy Marchant, Director, Adviceco Chartered Accountants

What rising interest rates will do to business cashflow

IT IS LIKELY Reserve Bank of Australia cash rate will rise to circa 2.5% by the end of the 2023 calendar year. This will put significant pressure on small business cash flow. Business owners need to act now to stay ahead of the game.

The reason for the interest rate increase is largely the current national rate of inflation of 5%. Low unemployment figures and strong consumer spending are driving the upswing.

This means that in the 2023 financial year, business owners must make 5% more profit to effectively be in the same position last year. If you’re sitting still, you’re effectively going backwards.

Inflation increases the cost of goods, services and wages so we are urging business owners to talk with their financial teams NOW to ensure they can keep pace with increasing expenses.

Here are some important strategies: • Review your pricing – business owners need to pass on cost increases.

Absorbing them is unaffordable.

Smart business owners will craft a pricing strategy that is palatable to their consumers, as opposed to a blanket increase. Your accountant can help you to select the right product lines and margins to target. • Pay down your debt – your financial structure needs to be paying down your business debts and tacking those interest rates head on. Profit in, debt down. • Data analysis – your data systems should be able to inform the impact of further interest rate rises down the line. Conduct a sensitivity analysis with your accountant and know what could happen before it actually does.

The best kind of risk management is risk prevention and data systems are the closes thing anyone has to a crystal ball.

If you would like to talk about your business cashflow position and the impact of interest rates to your bottom line, contact our team for a complimentary Discovery Session today: mail@ adviceco.com.au

Manufacturers show they are the future for the Central Coast

CONTINUED FROM PAGE 4

Our article on this subject on Page 7 highlights what is now a serious social issue.

The lack of housing in our region has created an enormous housing shortage that is being manifested in increasing rents as the demand for homes simply grows by the day.

While those in government collect their pay packets every Friday and go home and go to bed they ignore those that are struggling to find any sort of accommodation.

When Lee Kuan Yew setup Singapore just 55 years ago he concentrated on Housing, Education and Jobs. That foundation has made Singapore the most successful country on Earth.

None of these parameters seem to worry anyone in government.

It is now time for the State Government to step in.

The Ministers for Local Government and Planning need to take control.

Edgar Adams Editor

WHY BUSINESS OWNERS ON THE CENTRAL COAST CHOOSE CCBR TO GROW THEIR BUSINESS It’s simple.

✓ They can reach over 20,000 business readers every month. ✓ Most widely read and trusted business publication on the Central Coast. ✓ The repetition of your ad every month means readers will get to know you and remember you. ✓ Independent surveys show 94% of readers will use the CCBR for reference when looking for suppliers. ✓ The quality of the publication and the content means readers retain the CCBR for future reference.