HOW TO SECURE YOUR BUSINESS FINANCES FOR INFLATION
One of the most talked about topics in recent months has been inflation. Inflation can be sneaky, acting as an “invisible tax” that you might not notice in your small, daily purchases but which adds up quickly at the register during your weekly grocery trip. It will impact your finances from routine day-to-day expenses to major purchases like a new vehicle.
Since it’s unlikely that many peoples’ income will rise as fast as the inflation rate, the best way to prepare for inflation is to be proactive in knowing and assessing your long-term financial plans. Conduct a self-checkup to evaluate your finances and prepare for life’s uncertainties and opportunities. Below are some of the key areas to pay attention to when evaluating your finances.
Examine your interest rates: Take a close look at your existing debt and interest rate terms. Variable rate mortgages and credit cards are always tied to a major index that will be impacted during an inflationary environment. Consider refinancing to lock in a low, fixed long-term rate. There are still low interest rates available, so it isn’t too late.
Increase your revenue streams: To counteract rising costs, look into exploring additional ways to make more money. Start by examining what you already have; if you have industrial equipment or extra warehouse space, consider renting or leasing it out.
Construction plans: We all know the cost of construction has significantly increased over the last 18 months. If you are planning building expansions, consider whether your current and future income/revenue is enough to justify today’s increased costs. If not, talk with your lender to understand what available financing options you may be able to afford and utilize. And don’t forget to work with your contractor to value engineer your project accordingly.
Examine wants vs. needs: With the costs of just about everything going up, it’s a good time to re-evaluate your reoccurring expenditures. If you’re paying more for groceries and utilities, are there other places you can cut back on spending to offset the increases? Screen your purchases by establishing whether they are a true need. Bypassing pricier name brands or even delaying larger purchases that aren’t urgently needed could make up the difference on necessary items.
Meet with your banker: I can’t emphasize enough how important it is to have honest and open conversations with your banker. If you’re pondering a project or expecting a major life event, it’s an ideal time to discuss these with your banker. Lean on them for their expertise before you decide to make a major purchase or financial decision.
MEET THE EXPERT
Caryn Hughes is a Senior Vice President, Division Head of C&I Lending for Valley Bank based out of the Montgomery main office. She has been in the banking industry for more than 35 years. You can reach her at 334-270-3027.
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