As businesses struggle with inflation, Guardian columnist advises keeping ‘cash balances as high as possible’
A recent article in the Guardian cites multiple recent studies that indicate businesses must shore up their accounting practices as inflation and the threat of recession continue to impact their operations and finances.
The piece draws out key figures from three reports:
- National Federation of Independent Businesse: 91% of businesses say rising prices are having either a “substantial” or “moderate” impact on their companies.
- US Chamber of Commerce: Nearly seven in 10 small businesses have raised prices to cope with inflation, which is also considered their “dominating challenge.”
- Goldman Sachs: Almost 80% of businesses say the economy has gotten worse over the past three months.
“So what to do if you’re a small business?” asks columnist, Gene Marks, who’s also a CPA and business owner. His answer speaks to the importance of owning your cash at every stage of cash flow: forecasting, accounts payable, accounts receivable and credit.
“You leverage your accounting and customer relationship management systems to stay on top of your product lines, customer profits and margins. You raise prices discriminately and carefully. You communicate frequently with your customers and you expand your relationship with your suppliers. You constantly hunt for other sources of supply. You try to lock in long-term contracts and, like so many big brands, practice ‘shrink-flation,’ where you charge the same price for a little less product. You keep your inventories under control, your overhead low and your cash balances as high as possible,” Marks writes.
Taking action requires significant time and effort — automation and access to artificial intelligence can help. Especially since, as the article notes, “inflation isn’t going away any time soon. It’s no longer 2012, when rates hovered around 2%. It’s 2022, and you can expect the prices of your core materials to remain significantly elevated for at least the next six to 12 months.
“My best clients are always planning ahead.”
Read the full article here:
US inflation isn’t going away. Small businesses must plan ahead