May 2022

Business Advice
THE IMPACT OF INFLATION & RISING
INTEREST RATES ON CASHFLOW
In our new, regular business column, the experts at Know-it look at the effect of rising
interest rates and inflation on your business’ cashflow, and explain the steps installer
businesses can take to lessen the impact...
With the Bank of England increasing
interest rates for the second time in
as many months in March this year to
counteract the effects of inflation, you’ll likely see
weaker cashflow in your business.
Interest rates now sit at 0.75%, the fastest rise in
a decade. So why have they increased so rapidly?
Inflation has been the biggest factor. Inflation
is currently three times the Bank of England’s
target, reaching 6.2% this year, the highest
they’ve been in 30 years.
Interest rates have been hiked this year since
recent variants of covid-19 haven’t had as
much of an effect on economic growth as many
expected.
“By understanding the
effects coming your
way you’ll be able to
mitigate their impact
on your business’
cashflow”
The hike in interest rates and the impact of
inflation will be felt by businesses across the UK.
By understanding the effects coming your way
you’ll be able to mitigate their impact on your
business’ cashflow.
Purchasing materials
The cost of raw materials will continue to rise
throughout the year as suppliers pass their own
increased costs onto you.
Something to keep in mind is if you have already
agreed a project and agreed costs, a rise in cost
of materials will cut into your mark-up which will
have an adverse impact on your cashflow.
Importing & exporting due to changes in
the value of GBP (£)
Rising interest rates show confidence in the
British Pound, which sees the currency gain
strength and increases its value.
If you import goods this is great news for you as
you’ll be able to purchase materials at a cheaper
Continued on page 64
62 T I MAY 2022 PRACTICAL CONTENT FOR THE GLAZING INSTALLER & HOME IMPROVEMENT SPECIALIST