Top Service News
Emma Reilly, CEO at Top Service Ltd guest blog for Registry Trust
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Our very own CEO provided a guest blog for the latest Registry Trust newsletter. Discussing the impacts of rising energy costs, interest rates & the impact on the construction industry:
The construction industry is grappling with rising interest rates, which affects the cost of borrowing for construction projects. Additionally, inflation’s impact on the cost of materials and labour further strains construction businesses’ budgets and planning. It’s evident that businesses are facing numerous challenges in 2023:
Energy Costs: The substantial increase in energy costs by an average of 424% since 2021, as reported by the Federation of Small Businesses, puts additional financial pressure on businesses. This increase can impact overall operational costs and potentially affect profitability.
Company Insolvencies: The reported 27% rise in company insolvencies compared to the previous year, as stated by the Insolvency Service, suggests that businesses are facing financial difficulties. Economic instability and various cost-related challenges could be contributing factors.
Business Rates: The increase in business rates from April 1, 2023, based on updated rateable values from the Valuation Office Agency, adds to the financial burdens faced by businesses. Higher business rates directly impact the cost of occupying commercial properties.
Businesses are facing tough decisions to adapt to these financial pressures, such as re-evaluating their cost structures, finding ways to optimise energy consumption, exploring alternative financing options, or adjusting pricing strategies.
The combination of rising energy costs, increased business rates, expensive materials, and other financial pressures is driving more businesses into challenging situations.
The record levels of credit information searches by suppliers, as reported by Top Service, reflect a heightened awareness of the risks associated with extending credit facilities. This signifies that businesses are taking proactive steps to manage their risks and make informed decisions when dealing with other companies.
Reducing risk and maintaining sales while dealing with increased costs requires a delicate balance. Acting promptly when invoices become overdue to improve cashflow is highlighted as a crucial strategy for businesses to weather the challenges posed by rising costs and financial uncertainties. The construction industry, like all industries across the UK, needs to be proactive, agile, and simultaneously focused on the small details and big picture in order to successfully navigate the current economic environment.