Interest rates have been raised by the Bank of England from 0.75% to 1%. This is a fast rise, intended to keep up with the pace of inflation, which could potentially reach 10% by the year’s end.

This is set against an unprecedented backdrop: consumer spending is up after Covid restrictions ease; UK logistics and employment face ongoing post-Brexit challenges; the price of energy has spiked savagely after Russia’s invasion of Ukraine.

Yet with low growth in the economy, the traditional response of higher interest rates to bring down inflation is being tempered by those in charge, fearful of damaging the recovery.

All these factors affect you and your business. But we can help.

More interest, more debts?

In 2008, interest rates sunk to historic lows in the wake of the financial crash — and stayed there. After minor fluctuations, their recent rise to 1% may not be the end of the story. With inflation looking likely to remain high, many expect interest rates to continue  the upward trend, with the Office for Budgetary Responsibility - the government’s independent economic advisor - warning that the rate could reach 3.5%.

For businesses operating with debts, this means an unwelcome new burden. Not only because of the increase in operational costs and the cost of borrowing, but also the risk from debtor customers being unable to pay on time.

The potential knock-on effect of a client company not being able to settle its debts on time cannot be ignored. It can, and will impact on your own cashflow and ability to settle your own debts as a result. Now is the time to tighten up on your approach to credit control, and watch for early signs of problems with payment. We can help with your credit control, and cashflow funding requirements.

When customers face a debt crisis

The recent increase of interest rates to 1%, and warnings of inflation rising as high as 10%, means that your customers are facing a twofold pressure. Their costs are rising, and their ability to borrow - or pay back on borrowing - is threatened. The Bank of England’s latest data show borrowing is up, and repayments are down.

This can lead to debt issues, and if you are exposed through credit offered to customers, you can be pulled into the same downward spiral. We help companies with their debt recovery issues, which may include some necessary dispute resolution to bring matters to a conclusion. It’s not always possible to deal with debt recovery if you are directly involved, and engaging a third party can be the answer.