4 November 2016: Some businesses have experienced the increase in wholesale prices, especially where supplies are received from abroad with import product costs for businesses increasing by 10% to 20%. The pounds devaluation has inevitably increased input costs by 17% against the US currency.
Businesses may have to increase the price of the end products being sold or suffer reduced profit margins to prevent being driven out of the market when competing with low costs prices.
Manufacturing exports are amongst businesses who have increased sales as foreign buyers continue to increase the volume of purchases from the UK taking advantage of the devalued sterling.
Having said this, if the pound does not stabilise, businesses will have to increase their prices further and this could lead to foreign customers feeling the pinch and again having to reduce orders. This, in turn, could result in huge unmanageable overheads. Businesses may also struggle with margin cuts leading to cash flow problems and being driven out of the competitive market.
If you have concerns that your business may struggle in the uncertain times to come, our team at BRI Business Recovery and Insolvency are always on hand to help.