Stronger Cash Flow Could Help Sustain Productivity Levels
9th April 2018.
Productivity is rising at the fastest pace in more than a decade, in a sign that a problem that has plagued the economy since the financial crisis may be easing.
Sluggish productivity leaves workers struggling to meet demand as well as driving down the company’s profits. The UK has suffered from low levels since the 2016 referendum, with Brexit uncertainty and tough economic conditions distracting workers from the job at hand. Encouraging levels of investment and refocused business operations have recently improved output in UK factories and brightened the general national outlook.
Political uncertainty has affected work ethic, slowed spending and ultimately changed the business and personal behaviour of many residents of the UK. Now with a transitional deal with Brussels announced, and a clearer picture of what the country will look like post-Brexit, businesses are able to concentrate on achieving success. Productivity is hard to maintain and while levels are looking good now, businesses will need to work hard to keep their employees working hard.
At the Credit Protection Association, our debt recovery services chase unpaid invoices and free up cash flow, giving our members the opportunity to afford new equipment, technology, or a larger workforce. Replacing manual processes with automation, for example, is a popular option for many of our members, which not only strengthens their competitive edge but also eases the daily grind.
When the financial crisis hit in 2008, productivity in Britain and other advanced nations slumped. Unlike after previous recessions, productivity has struggled to bounce back and is a fifth lower than it would have been had it returned to its previous growth rate.
Robert Jenrick, exchequer secretary to the Treasury, said: “It’s encouraging that we’ve had the best two quarters of productivity growth since the financial crisis, but we must improve productivity over the longer term, which is why we are increasing public investment in our schools, hospitals and infrastructure in this parliament to the highest sustained level in 40 years.”
The figures show that the manufacturing sector contributed some of the biggest improvements to the productivity rate. Output per hour in the sector grew by 2.6 percent in the final quarter of the year, compared with a 0.3 percent growth in services.
While the UK economy is still going slower than European rivals, the overall outlook is looking a little brighter. Transition deal with Brussels are underway and our businesses are hiring more people than ever. The morale boost felt by subsiding Brexit uncertainty is giving our members a renewed enthusiasm in their efforts, and productivity levels are reportedly strong. With competition on our tail and inflation and interest rates still threatening our smaller businesses, we cannot afford to assume this good news will remain for long.
Increased productivity not only helps businesses weather economic downturns, but also helps that bottom line, and gives cash flow a boost. At the Credit Protection Association, our debt recovery services free up cash flow and afford our members some financial freedom. Acquiring some extra cash can mean investing in state-of-the-art technology or just launching training programmes for your staff, or an answerphone machine to allow your secretary to take a break in the afternoon. By investing in your employees you’re not only encouraging higher profits but a more loyal and dedicated workforce.
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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