(Financial) times they are a changing….
Sterling in freefall, Marmite jitters and the minimum wage goes up!
Business owners who enjoy a slice of toast and marmite (other yeast extracts are available) for breakfast as they speed read the financial pink pages can be excused a rather tired and battered look.
With the country (and the rest of the world) suddenly waking up to the fact that there really wasn’t a plan in place should the UK vote to leave the EU, that feeling of relief when the sky didn’t fall in on June 24th is beginning to evaporate.
Wall Street shuffle
For SMEs, if they ever needed some support and guidance on financial matters, the time is probably now. Currency transactions can be a minefield at the best of times but for businesses purchasing goods from overseas, unless they fixed a rate at the time of the order, their cashflow forecasts will need some serious updating in the wrong direction.
Although the sterling/Euro position makes that dash to Belgium for tobacco and gin rather less attractive the litmus test is always the mighty greenback. Anything purchased in dollars becomes more expensive and unfortunately for us that includes oil and the glass bottles that Marmite comes in!
Of course another important point to consider concerns businesses that rely on getting their own invoices paid in order to cover a currency position. With such volatility around they need to ensure they are paid on time or preferably earlier.
Back home
Closer to home, businesses with a young workforce will have to dig even deeper into their pockets from October 1st. Regardless of whether accounts and projections indicate only a 2% wage increase is feasible, for apprentices and other workers up to the age of 24 the government has just increased the minimum wage by between 3% – 4.7%. And although sums like 25p an hour don’t sound like very much it is all relevant to just how many qualifying staff are involved.
Time will tell
It certainly doesn’t get any easier to run a business or make any plans about its future in these confusing times and that’s even before we’ve triggered Article 50 or started negotiations with the EU.
Financial crises however are not new phenomena and the world managed to overcome Dutch tulip mania and the South Sea Bubble. So don’t worry, in 300 years’ time history students will wonder what all the fuss was about!
By Steve Leeves