4th August 2023

What does the Hike in Interest Rates mean for Business?

On the 3rd of August, the Bank of England raised UK interest rates for the 14th consecutive time to 5.25%, the highest level since the 2008 financial crash, as it continues its battle against rising inflation. 

Changing interest rates means it becomes more expensive to borrow, and more profitable to keep money in savings accounts, theoretically meaning consumers will spend less and drive prices down to more manageable levels. 

But danger arises from the fact that UK inflation, in large parts, can be considered a direct result of supply issues, and mounting red tape on imports following the ongoing Brexit negotiations. Much of this is out of our control and could be considered a reason why inflation refuses to fall. 

This means that supporting UK businesses with practical cashflow solutions is becoming more important than ever, not just to help them survive, but also to prosper and grow. 

What does the interest hike mean for business? 

There’s no way of knowing what the future holds in relation to interest rates. But until inflation comes down, it is unlikely to reduce.  If fact, there is a probability of further increases, albeit at a slower rate. 

With banks being more cautious about lending cash, coupled with higher running costs for businesses, many SMEs will suffer from financial restrictions in the coming months. But with SMEs accounting for 99.9 percent of UK business, their success will be closely tied to future recovery. Tackle inflation, and some of the other issues disappear. 

Providing support when needed most 

If businesses are to grow, and truly thrive, they need the confidence and the funding to manage cashflow sufficiently, cover costs and drive innovation. 

Now more than ever, it’s important for businesses to secure their cashflow. Invoice Finance is an industry that has seen this all before. We've supported businesses through previous recessions, and we’re well placed to do so again. This is a time when alternative forms of finance and business funding can support businesses struggling to generate sufficient working capital needed for their present and/or future plans, particularly with bank lending set to become a more restrictive and expensive process. 

Invoice finance to the rescue 

We offer a range of flexible funding solutions, designed to grow and scale according to your business needs. 

To find out more, visit our website, email or call us, to speak to our experienced team to find out how invoice finance could help your business. Products include invoice discounting and factoring that can boost your cashflow and give you access to a dedicated credit control team.