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Three more years for companies to improve cash flow before interest rate hikes

By 29th August 2013March 16th, 2022No Comments

 

<br /> Adam Thomas

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Adam Thomas

Mark Carney, the new Governor of the Bank of England, has re-iterated his intention to keep the base rate at its historic low of 0.5% until 2016 as part of his “forward guidance” policy. 2016 is when unemployment is predicted to fall to 7%, the equivalent of approximately another 750,000 jobs being created. Mr Carney also added caveats that this policy would be reviewed if inflation was expected to be above 2.5% on an 18-24 month projection or if an artificial bubble were created in an asset class that threatened financial stability.

This is good news for businesses as it will allow them to plan their financing with more certainty over the next three years, with less worry that their bank debts will cost more to service.

As a result many companies will have more confidence to invest and grow over the next few years creating more jobs and putting more money back into the economy.

At the same time other companies will also be looking wherever possible to reduce their debts so that they are not caught out by larger interest payments when interest rates do rise .

For companies in both situations it will be imperative that they maximise their cash flows in order to achieve their goals.

One solution, however often overlooked, of increasing a company’s cash flow is to better manage their non-core essential business costs such as energy, waste and stationery.  Each individual saving, however small, cumulatively adds up to a not insignificant amount of money that can be better spent elsewhere within the business.

The quickest and simplest way to identify and realise these savings with confidence is to join 3,500 other UK companies who are already working with an Auditel cost management consultant. Effective cost management not only reduces the prices paid it also proactively looks to reduce consumption, resulting in even better cash flow.