Business In Uncertain Times

Business in Uncertain Times

We have had four Chancellors of the Exchequer in four months, at time of writing. Politics and the economy are in turmoil with a mini budget, gradual dismantling of the mini budget, followed by an emergency statement. We are now awaiting the medium-term fiscal plan.

Proposed tax rates are going up and down seemingly like a game of snakes and ladders, and it has been very difficult for advisers to help clients to plan for the future.

The small business minister role has been scrapped but hopefully the importance of this sector to the economy will see this reconsidered.

But what should businesses do in these uncertain times?

It was very encouraging to see how the finalists at the recent Bury Free Press Business Awards demonstrated the ingenuity and drive to survive and prosper whatever the circumstances.

Therefore, a sensible course of action is probably to try not to panic and instead focus on controlling things that are within your control.

One area where the best companies exercise control over their businesses is in relation to credit scores. Research from the Capitalise funding platform shows that companies that monitor their own customers’ credit scores are six times more likely to have an ‘A’ credit score. 

Not only are these companies able to identify and mitigate problems with their customers, but they are also considered to be more robust and therefore more easily able to obtain credit from suppliers and lenders themselves. 

Companies with good control over debtors also have lower working capital requirements.

Another area of control is the preparation of future projections. This is even more important in times of uncertainty. Whilst in most cases the future outcomes are likely to differ from the projections, the real benefit is that regularly monitoring actual results compared to projections gives an early warning that assumptions aren’t going to plan, so any actions can be taken promptly.

In recent years advances in cloud accounting technology have enabled even the smallest businesses to produce reliable, up to date accounting information and also to generate projections efficiently and cost effectively. 

Your accountant will be able to direct you to the most suitable cloud accounting products for your circumstances and assist you in making the most of the opportunities of new technology.

Chris Kelly is a director at Jacobs Allen Chartered Accountants and Tax Advisers