Renewed Focus on Cash Flow Will Sustain Strong Profits
8th May 2018.
The collective profits of British companies rose to a record high in the first quarter of 2018.
It has been a difficult few months for business owners, with skyrocketing business rates, interest rate hikes, inflationary pressure and political uncertainty. All these elements have created a shaky professional environment and a negative outlook for the years ahead.
However, inflation has now dipped, wage growth has improved, and the government is finally making progress in trade talks with Brussels. As a result, recent economic data has found an improved business confidence for British businesses across the country. According to analysis by the Share Centre, a stockbroker, profits at the 350 biggest companies increased by 158 percent to £153.8 billion between January and the end of March, highlighting a vast improvement in activity within the business landscape of the UK.
While the new data revealed the UK is still lagging behind international competitors, the prospects for profit growth are still strong and could suggest a brighter post-Brexit landscape. Despite the retail ‘apocalypse’ that still lingers on the high street, the strength in sales within the FTSE 350 companies has demonstrated the prospective success of the sector.
Whether the business is doing something right or something wrong, it is important the owner scrutinises its financials carefully. At the Credit Protection Association, our debt recovery services free up cash flow that our members use to improve profits or sustain strength they have already acquired.
Analysing the health of Britain’s top businesses is a useful exercise because it acts as an indicator of the overall health of the economy. The better companies perform, the more they tend to invest in future growth, providing an additional boost to employment.
Helal Miah, an investment analyst at the Share Centre, said: “The global economy is on a tear right now, with synchronised expansion in most of world’s key regions. In this most important of reporting seasons, UK plc has delivered the strongest set of results in years, extending a period of growth not seen since the recovery in the immediate aftermath of the recession and financial crisis.
“Strong economic expansion around the world, coupled with positive exchange rate effects, and more efficient cost-bases proved a powerful shot in the arm for multinationals. Home-grown companies may not have matched their international peers, but they too have done well.”
A separate survey of business confidence from ICAEW, the accountancy body, found that regulation and staff turnover had become the biggest headaches for businesses.
The ICAEW found: “Staff turnover is also becoming a greater challenge as more businesses are finding it difficult to replace departing workers. Sectors such as construction and business services who employ large numbers of migrant labour are especially finding staff turnover difficult.”
Despite historically negative political and economic conditions, the overall UK economy is improving. Inflationary pressure has eased as well as political uncertainty, making the grind easier on businesses. Confidence has improved and future prospects have brightened, with the post-Brexit landscape no longer all doom and gloom.
There are still issues tormenting business owners, with the construction and retail sectors still struggling with low profits and staff turnover. Whether you’re a contractor or one of the FTSE 350, freeing up cash flow is vital to a healthy and prosperous business. Whether it’s to sustain or rescue profits, approaching a third party could keep the UK business culture ahead of its rivals.
At the Credit Protection Association, our debt recovery services chase down unpaid invoices and give our members the financial freedom to either expand or sustain strong future prospects. Our members have used the extra cash to invest in new technology, renovations or a larger workforce; while also putting some away for a raining day.
Our credit management products have also added a wall of protection, where our credit checks, status reports, and company directories reassure our members of the positive trajectory of their business.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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