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Rising interest rates and high inflation: how to plan for these economic challenges

Capitalise Aug 10, 2022


The Bank of England has increased UK interest rates from 1.25% to 1.75% and has predicted that the UK will fall into recession in Q4 2022. 


This is the biggest jump in interest rates in 27 years and a sign of the serious state of the UK economy. The Bank of England believes that increasing interest rates should help to curb spending and bring stability to the UK economy. But for UK businesses, this interest rate hike is likely to be an added challenge. 


Borrowing could be a lifeline for many businesses over the coming months, as cash becomes tight and the economy becomes more unpredictable. But higher interest rates make it more expensive to borrow – creating a hurdle to funding, growth and future prosperity.

So, what can you do to leap over these economic hurdles? And what are the practical steps needed to recession-proof your business and keep your business finances on track?

What’s causing these widespread economic issues?


In early 2022, our Get Fit For Business report found that over three-quarters (76%) of UK business leaders were feeling optimistic about the coming year. This future positive outlook will be key to long-term recovery. But having navigated the first half of the year, it’s clear there are external threats for businesses to plan for:



These are significant challenges for your business. But by keeping an eye on cashflow, credit scores and those of your trading partners and competitors, you can reduce the impact.


1. Make the most of cashflow tools and forecasting


When you’re navigating tough economic times, it’s sensible to keep a close eye on your cashflow position. If you can keep your cash inflows and outflows under control, that’s good news for your working capital and your overall financial position.


Here are some tips for keeping your cashflow positive:


  • Use the latest cashflow tools – our upcoming Cash & Capital reporting tool helps you see a breakdown of your cash and capital and how they impact your credit score. Keeping on top of cash and your credit risk-rating is far easier when you have these numbers and data visualisations at your fingertips.

  • Run regular forecasts – knowing your cash position in a future period is invaluable, so forecasting is a must. If a forecast shows a cashflow gap in six months’ time, you’ve got enough warning to plan, take action and find alternative funding or savings.

  • Look at multiple ‘What if…?’ scenarios – scenario-planning helps you manage multiple future outcomes. What if prices rise by another 10%? What if your repayments increase by 13%? Run projections, see the potential outcomes and plan for them.


2. Improve your business credit score


Checking your credit score on a regular basis helps you understand the impact this score is having. A high-risk rating is likely to reduce your access to trade credit, new contracts and funding. And that’s bad news when high interest rates are affecting your borrowing.


Capitalise can help you make the most of your credit score:


  • Check your current credit score – you can check your business credit score for free, giving you an instant understanding of your credit profile with the major credit agencies.

  • Work with credit specialists to improve your score – our credit improvement partner helps you improve your business credit score to open up new lines of credit.

  • Enhance your business finance position – if you move from a high-risk to low-risk credit score, suppliers and customers will look at your finances more favourably. And lenders will see you as a more attractive proposition for offering finance deals.


3. Monitor your clients, suppliers and competitors’ credit profiles


High interest rates and rising inflation don’t just impact you. It’s also affecting your clients, suppliers and competitors. Access to another company’s current financial position used to be an impossibility. But with the latest business credit score tools from our partner, Experian, you can view and analyse a third party’s credit profile.


  • Look up any business’ credit score – our credit tools allow you to check any company’s credit score. This could be a customer, a potential supplier or even your main competitor in the market. This allows you to:

    • Credit check a new customer to check for any financial red flags. This is good practice before signing any new customer contract.

    • Run a credit profile on a new supplier to check if their finances are stable – a good idea when they’re about to become a vital link in your supply chain.

    • Look at the credit rating of your main competitors and benchmark your own credit score against this metric. 

Get a deep dive on their credit profile – our report shows you the company’s credit score, their financial profile and their payment performance. A poor (high-risk) credit score and a history of slow payment is a good indicator that the company is finding things tough.


4. Be aware of changes in your market

Knowing how well your clients, suppliers and competitors are faring financially puts your business in a stronger position when making strategic decisions. But it’s important to also be on the ball when it comes to changes in the wider market and your own specific sector.

Are your raw material costs continuing to rise? How is this affecting your margins and profitability on projects? Are sales still buoyant, despite the impacts of inflation? Or are customers reining in their spending, resulting in smaller revenues and missed profit targets?

Do your research, refer to industry benchmarking results and keep your finger on the pulse.



5. Have a practical funding strategy in place


There's no way to shield your business 100% from rising inflation and high interest rates. This is a global issue that’s making money tight for all businesses. But having a finance facility to call on could make all the difference.


he days when your bank manager was the only route to funding are over. The modern 21st century lending market is growing and evolving, with plenty of options for funding.


Sign up to Capitalise for Business and you’ll have all the tools to manage your business finances. Plus you open a network of 100+ lenders, with finance products to suit all your needs.


Choose from:



A healthy credit score and positive cashflow make it easier to find funding. And with extra cash in the bank, you’re set to ride out the challenges of high inflation and rising interest rates. 


Try Capitalise and supercharge your cashflow, credit score and funding.


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