The rate of inflation fell for the first time in 16 months in November, down to 10.7 per cent from 11.1 per cent in the previous month.
The drop in the Consumer Prices Index (CPI) figure was slightly bigger than expected by most City analysts, who forecast the annual rate of price rises would slide to 10.9 per cent.
The Office for National Statistics (ONS) said the cost of hospitality, hotels and restaurant food played the biggest role in pushing prices higher in November by 10.2 per cent from 9.6 per cent in October.
Fuel prices rose by 17.2 per cent in the year to November 2022, down from a 22.2 per cent increase in the year to October.
For SMEs, the hope is that the worst is behind us and that the figure will continue to fall. But while still at record highs, there are ways to mitigate the effects by making sure their businesses are operating efficiently.
Measures could include:
A better approach to price rises
Is a blanket percentage increase across all goods and services necessary? Might it be better to target certain areas like suspending promotions or discounts? Otherwise, a loyal client base could be alienated.
Looking for savings within the business
Are you staffing your business efficiently and could rotas be run more efficiently? Can you manage without agency/freelance workers?
You should look at negotiating discounts for bulk purchases or cut quantity or excess orders. Are there smaller suppliers you rarely use, but keep paying?
Keeping cash flowing
Margins are often small for SMEs, who are less liable to have reserves of cash than bigger companies and, therefore, more vulnerable to cash flow problems.
Keep a close eye on your accounts receivable to make sure you’re receiving payments promptly.
Reduce your Corporation Tax bill
There are several areas where you might be able to reduce the tax and claim reliefs or make use of existing allowances. We can help with this.
Need help with making your business more efficient? Contact us today.
