2023 is just around the corner…
And SMEs need to be more focused than ever on how they’re going to adapt to the continually changing landscape.
A few ways financial trends in 2023 might impact your business…
▶ Inflation will erode your profit margins
Inflation obviously reduces the purchasing power of your customers, which will in turn impact your top-line revenue growth. To offset this, you’ll need to find ways to cost-effectively increase your prices without losing too much business to competitors. A combination of operational efficiencies and measured price increases.
▶ Profits at risk from increased interest costs
First off, interest rates are expected to continue upward, which will put pressure on servicing debt. And with the cost of borrowing increasing, it will make it harder for companies to access the capital they need to grow and remain competitive.
▶ Unfavourable exchange rates will dent profitability
In 2023, many UK businesses will simply be less profitable if the sterling continues to be weak. Competition globally will be challenging. To mitigate this risk, significant numbers of UK companies are already seeking out new suppliers and thinking more creatively.
▶ Threats to cash flow
With everything that’s happening in the economy right now, cash flow is coming under increasing pressure again. Assuming you already have effective credit control systems in place for customers, it’s worth looking to optimise them and consider whether any improvements can be made around early payment discounts, or more strategic decisions, based on any potential over-reliance on a single customer.