December 9 Federal Reserve Meeting Could be Key Milestone, NECP Notes
With the recent stalemate in Congress that led to a government shutdown, it is ever important for business owners to assess current economic and geopolitical influences that may impact their operations and cash flow. Three elements that all business owners must watch carefully over the next year include continued interruption in the supply chain, increasing costs, and fluctuating interest rates. By monitoring these three key areas, businesses will be able to gauge the impact they will have on their cash flow and income statements, according to Thomas (Tom) Desmond, Founder and Managing Partner, New England Consulting Partners (NECP), a turnaround management firm serving small and midmarket companies across the U.S. and in Europe.
“We are all aware of how quickly the supply chain could be interrupted by circumstances globally. While these situations continue to develop and evolve through diplomatic and political means, the impact they have on business cannot be defined as each day presents new information and additional complexities to these matters. However, in the event that these tensions should escalate, they could have a dramatic effect on the economic equilibrium achieved over the past several months. In order to counter the potential effects of this hypothetical, businesses must prepare now so as to adjust to a rise in inflation, supply chain interruptions, and diminishment in their cash position,” Desmond said. NECP is currently working with two clients facing these issues.
Desmond added that it's very difficult for middle market companies to pass inflationary costs to their customers. As all areas of business become more complex, interest rates are unique in the sense that they could come down or go up quickly. The next meeting of the Federal Reserve is December 9, 2025. If energy costs cease to come down, their meeting could have an immediate inflationary impact.
Any increase in inflation will cause disruption in the supply chain as costs are driven up and possibly price out consumers. For this reason, it is imperative that businesses explore the possibility of sourcing alternate supply chain route methods, shortening their supply chain as much as possible, and keeping their suppliers close. This could help keep the cost of production reasonable and aid in keeping prices stable, thus minimizing the impact on customers and consumers.
“We do not anticipate a quick resolution to these ongoing challenges. Foresight should assume that global tensions will escalate before a resolution or de-escalation can be achieved. Companies should work toward minimizing the negative financial impact on their production costs and cash flow in order to prepare for peaks and valleys in their cash flow modeling,” he said.
About New England Consulting Partners
Founded in 2001 by Thomas Desmond, New England Consulting Partners (NECP) is a turnaround management firm with offices throughout the U.S. and in Europe. The firm provides strategic and tactical services that bring financial stability to middle market companies in distress. Typically referred to its customers by banks, NECP has successfully saved hundreds of companies and thousands of jobs across a wide variety of industries. See neconsultingpartners.com.
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It is important for business owners to assess current economic and geopolitical influences that may impact their operations and cash flow, according to Thomas (Tom) Desmond, Founder and Managing Partner, New England Consulting Partners (NECP).
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Dawn Ringel
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