None more blatant than retail activity which became subdued due to a loss of operating hours and sales as a result of load shedding, and this during peak trade, a period heavily relied on for annual turnover.Similarly, the impact of the electricity supply crisis on the manufacturing and production sectors is no less dramatic, where insufficient production cycles mean unfavourable production volumes that are required to cover overheads, quickly leading to a loss-making scenario.
So, the question then is not how the World Bank forecast is going to impact business, but rather how business is going to be able to perform against a backdrop of uncertainty, and, more importantly, whether the deteriorating business environment can be slowed?Businesses now find themselves focused on the short-term realities instead of adequately planning for the longer-term, potentially running the risk of sacrificing sustainable long-term ideas in order to address these short-term pressures.
The use of financing can also address this challenge, allowing a customer additional time to settle their creditors by changing the creditor from the product supplier into a financial trade partner. This then automatically creates further cash flow pressure for the supplier, as they now have to wait longer for cash to be received – and we know that this is often the same cash that is relied on for their repurchase of stock.
Which means that their view on debt must change. While previously seen as a negative aspect, if a business correctly identifies where its money is tied up and finds financing options to unlock that invested capital, it can benefit tremendously.
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