Experts advise looking at the coming months with an eye toward estimating what will happen to cash balances. “Proactively managing cash flow is critical right now,” mentions Lisa Anderson, president of LMA Consulting Group.
“Retailers must deal with rapid cost increases by managing cash flow efficiently and communicating effectively with customers and suppliers. The benefits of inventory reduction must be balanced against the need to maintain critical stock for the most profitable items.
Inflation has taken root and is rising faster than any time in recent memory. Retailers everywhere are dealing with annualized cost increases of more than 8 percent—the fastest pace in 40 years and significantly higher than the 1.8 percent average of the past decade. According to the U.S. Bureau of Labor Statistics, The Consumer Price Index increased 8.5 percent for the year ended March 2022, which is an average of all items. Among items that impact the floral industry, prices for fuel oil increased 70.1 percent, gasoline prices increased 48.0 percent, natural gas prices increased 21.6 percent and electricity prices increased 11.1 percent. The resulting upticks in operating costs can cause serious damage to a business’s bottom line.
Most experts don’t see relief any time soon. They point to a number of root causes, one of which is energy.
Of all the steps retailers can take to mitigate the bottom-line effects of inflation, the most important is better management of cash flow. Inflation tends to accelerate the drain of money from company coffers and throttle the flow that comes in. If left unaddressed, these battling trends can gut profits and threaten business survival.”