High inflation: What does it mean for your business?

High inflation is hitting businesses and households hard in 2022. Across the world, inflation is running high, thanks to factors like pandemic disruptions, monetary stimulus and supply-chain issues.

You’ll see the effects of inflation at the supermarket and the fuel pump – and in your business.

Eroding each dollar’s buying power

Inflation increases prices, which eats away at the buying power of your dollar. For business owners, that means you’ll encounter higher costs from your suppliers. Materials are more expensive, transport has become far more costly, and basics from office supplies to utilities are all rising in price.

In addition, your staff are probably asking for pay rises. For you and your employees to keep up with the higher price levels, your income needs to increase by at least the same amount as inflation. To achieve that could mean a seriously large wage bill increase for your business.

Rising interest rates

Central banks try to keep inflation at a sustainable level. They react to high inflation by raising their interest rates, which slows the economy and puts a handbrake on inflation. As a business owner, you’ll see this reflected in a higher cost of borrowing, and the same will apply to your home loan.

Inflation does have some side effects that could be positive for your business. First, it tends to push up the value of big-ticket assets that your business might own, like property or plants. Second, it makes debts seem smaller – your debt amount stays the same but hopefully your income rises.

It’s time to raise your prices

With higher price levels causing you to spend more, your business will also need to raise its prices. This is always a sensitive topic to tackle with clients and customers, but at least the way has been paved for you by prices rising across almost every single sector and industry.

If you’re wondering how much you need to increase prices in order to keep up with inflation or maintain your margins, do give us a call. We can run the numbers, test out scenarios and figure out a sweet spot that will work for your business. We’d love to help.

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What our clients say

The team at DFKOGC is incredibly knowledgeable and experienced in the field of accounting. They took the time to thoroughly understand our financial situation and provided tailored solutions that perfectly suited our business needs. Their attention to detail and accuracy in handling our accounts give us complete peace of mind. On behalf of Maungakiekie Golf Club, I wholeheartedly recommend DFKOGC to anyone in need of professional accounting services.

Hugo Littlejohn

DFK have supported us for many years and the service has been great across various partners.

MAHA Australia & New Zealand

We have been dealing with the team at DFKOGC since last 10 years and we have always found them to be very professional and supportive to all our accounting needs.They do have full range of professionals available in the team to cater for all the accounting related Services and very responsive to all the client requirements.

Munish Singla

Brilliant team. Extremely helpful and professional business attitude.

Mehernosh Kotwal

My Company has been utilising the services of DFKOGC for many years and this itself speaks volumes for the excellent professional services rendered by them. I have been interacting with the DFKOGC team for the past 2 months and I have found them to extremely responsive, very professional and always willing to go the extra mile to service us.

Mary Abraham

Very efficient and has a personal touch. If you have questions, they respond in a timely manner and even visits you to explain things face to face.

Marlo Camacho
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