Free Up That Cash Flow, Interest Rates On the Rise!

9th February 2018.

The Bank of England has indicated that interest rates could increase, and many business owners and consumers may see their cash flow take a hit.

While the Bank policy makers voted unanimously to keep rates on hold for the time being, it was agreed that a sharp rise will be necessary, and it could happen as early as next May. An increased rate will affect households dramatically, where they’ll see their mortgage rates rise, while high street banks will raise their interest rates, making it easier to save.

Here at the Credit Protection Association we saw the consequences from the last interest rate rise last November. We witnessed the sharp decline in borrowing and and the sharp increase in the cost of credit, and saw our members take a closer look at their personal finances. This impacted retailers hard, as consumer spending declined and shoppers become more careful with their money. We advise our members and business owners to prepare your business for the eventual fallout. Whether it’s maximising your own cash flow or cutting your costs to aid your customers.

In November, the Bank raised interest rates for the first time in more than 10 years – from 0.25 percent to 0.5 percent.

Its forecasts at the time indicated there could be two more increases over the next three years. However it now appears there could be a third increase and that the interest rate rise could be sooner than expected.

The global economy is expanding at the fastest pace in seven years, and the Bank sees its positive effects on the UK as a reason for a rate rise.

The Bank has raised its growth forecast for the UK economy to 1.7 percent this year, from its previous forecast of 1.5 percent made in November.

There is an old convention of increasing interest rates when inflation is above target, and it looks set to return.

When it comes to interest rates there is much talk concerning the winners and losers, from happy savers to unhappy borrowers. Many consumers resist spending to avoid the high borrowing rates and thus lead businesses to experience a weakened demand and a weakened spirit. Businesses are also discouraged from pursuing expansion ambitions on the basis of funding. As high street banks increase interest rates, this makes it harder for small businesses to afford to grow.

Credit management companies like us at the Credit Protection Association are experts in maximising cash flow, and can do it with no extra interest or added stress. Our debt recovery service within CPA frees up cash flow and allows our members to spend their cash how they like, whether it’s to grow their business, or on a beach in Barbados.

To prepare for the fallout generated by this interest rate rise, we would recommend our members maximise cash flow and reduce overdue accounts. Contact CPA with the details below for help and advice!