Conditions Are ‘Confidence Sapping’

There is a lot of uncertainty at present, caused by:

  • the world political events (Middle East, Ukraine, Iraq).
  • the slow-down in the Chinese market.
  • the problems the Australian government is having with its budget being passed by the Senate.
  • interest rates will probably remain low for the immediate future. However, there is speculation that the Australian Reserve Bank Board would like to move the rates up to around 3.5%. It would be prudent to factor in the potential for the interest rate to rise 1% to 2% during this financial year.

All of this is ‘confidence-sapping’ and highlights the need for businesses to take into account all of the prevailing conditions and to prepare a budget and cashflow forecasts for the next 12 months, in recognition that the economy is sluggish with little growth. It’s prudent to monitor your cashflow forecasts on an ongoing basis, either weekly or fortnightly, so you’re able to react to any changes.

Debtors will again be one of the major areas for concern for most small business operators. It’s recommended that you monitor your debtors’ position in detail, at least every month.

With a sluggish economy, businesses also need to be careful about investment in stock and work in progress.

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