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Monday, 9 June 2008

Consumer Confidence - Free cash flow model!

Is it any wonder that consumer confidence is low? (see the news items in all the Sunday papers this weekend (7th June 2008).

Living in an old house that is not fuel efficient we use coal, logs and heating oil in the winter. (Not a great carbon footprint!) We received our heating oil bill last week. In April we paid a record £325 for a tank top up.

In what was a very cold May on the east coast we had to top up again. This time the cost was £475! In a month our fuel costs rose £150! Now being a bit tighter than most Scots I turned the heating off straight away!

Allied to my wife telling me that the cost of the weekly food shop has gone up by 20% at least, then we like everyone else, are facing rampant inflation in our household. That's before you need to fill the tanks of the cars we run.

I cannot see any other result than a steeply rising wage inflation scenario. This will underpin inflation once again.

With wage costs being a relatively large part of many services businesses' budgets this could lead a sharp rise in costs for many SME's. One could counter that argument by saying people are worried about their jobs so they may temper wage claims. However, with REAL household costs escalating as fast as they have in the last 12 months AND the ability to remortgage one's home to release some cash for holidays, cars, and general household spending almost non existent, then we may see a sharp rise in wage claims.

Not a happy economic backdrop for all of us. The remedies?? Well higher interest rates are a blunt instrument but the only one that Bank of England has available. Lower spending by businesses and consumers is a necessity now. The old adage of "make do and mend" will be more prevalent attitudes than bin it and buy a new shinier bigger version!

This will lead to lower sales in shops, car dealerships, estate agents, furniture and household suppliers. We recommend that all SME businesses are aware of their cash position every day, as costs rise and sales may fall.


To that end we are prepared to give away our daily cashflow model to any business person who needs help in handling cashflow problems. USE our model to plan every payment in and out and this will help you stay within your bank facilities or overdraft. It will also impress the bank that you have things under control!

This normally sells for £27 plus VAT so get this while we are feeling generous!

Please send me an email at and I will send it to you straight away.

Well off to the garage now for another shock when filling up the tank.


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