According to a survey carried out for the financial risk management firm, Company Watch, over a quarter of the UK businesses in its 500 strong sample have not even thought about planning for it.
What the First Rise Might Be
It seems that some people believe the rise could be as much as 0.75% and are adjusting their financial business panning accordingly. Others are preparing for a 0.5% rise while an equal number think they only have to plan for a 0.25% rise.
How Can the Extra Costs Be Accommodated
How they will address the added pressures on their finances also varies. While some said they would try to get a better deal with a different lender if their bank debt payments start to spiral, a much larger percentage say they are already discussing terms to lock-in their current debt arrangements.
Essex bookkeeprs Office Assistants (http://www.officeassistants.org) have been monitoring the situation. Managing director Lynn Watson says, "Half of those trying to plan for these eventualities intend to increase sales and generate more revenue that way. A third will be looking at how to cut other costs, but only 3% said they would pass on the extra costs to their customers."
The Knock-on Effects
Emma Caister is Strategy & Business Development Director at Company Watch. She said, “Clearly with many companies in the Company Watch survey still feeling the effects of the long recession, even a small increase in debt costs might end up having a big impact on the strength of their businesses. We believe it’s sensible for companies to understand not only what higher interest rates might do to their own businesses, but also to examine what the impact might be on the financial health of their main suppliers and customers.”
Even if you don’t have bank debt that will be affected, people you do business with might, and there are plenty of angles connected with the probably interest rate rise that need to be considered. Your outsourced bookkeepers could be the best source of advice, support and inspiration for how to keep your business on an even keel when the Bank of England raises the base rate.
Office Assistants offers bookkeeping services and much more to clients throughout the south east of England from their base in Rainham, Essex. For more information visit http://www.officeassistants.org.