Planning business acquisitions with finance can be assisted by utilising information through sources such as the RBA and ABS and using professional services such as Business Finance Australia to secure cost-effective loans. The need for assets such as equipment, plant and machinery can arise at any time in the business cycle. Sometimes the need is urgent and immediate while in other cases, the business may schedule longer-term strategies over several years. When it comes to making decisions around moving on the investment and how to best structure finance to work through the upcoming economic conditions, additional intel can be invaluable. The ABS is a good source of data on a whole range of economic activities. In regard to finance, knowing possibly when interest rates may rise or fall, can be important to planning acquisitions with the most cost-effective loans. To assist businesses in this regard, information and outlooks provided by the Reserve Bank of Australia are worth reviewing. The RBA issues a statement each month to announce decisions on rates and these include some information on forecasts. In the current climate, these are essential reading as Governor Lowe often eludes to the prospect of when additional rises will be enacted. A more detailed paper is released by the RBA every four months – the Monetary Policy Statement. This is a very detailed analysis of both global and domestic issues which are seen as impacts on the Australian economy. The latest of these statements was released recently and we provide a summary of some of the major points. RBA Statement on Monetary Policy: August 2022 Key points to note to assist business operators:-

• Inflation is high on a global basis with some countries posting levels in the range of 7-10% while Australia is at 6.1%.
• The rate of unemployment, 3.5% in Australia, is also low in other similar advanced economies.
• Strong levels of demand which are not being met with the constraints facing businesses in regard to supply are seen as the major contributors.
• The invasion of Ukraine has led to rising energy costs globally and some food price increases.
• Interest rates globally have increased faster than anticipated as a result of soaring inflation.
• Economic growth is expected to slow as household spending levels ease.
• Global economic growth figures were recently downgraded by the official body. This includes impacts for Australia.
• Australian inflation forecast to peak around 7.75% late-2022 before dropping to around 4% in 2023 and further to 3% in 2024.
• Prices for gas and electricity could see a 10-15% increase in late-2022.
• Unemployment has dropped at a faster rate than had been expected. RBA business surveys indicate that many enterprises are intending to take on new labour but are confronted with issues in this regard due to the current low unemployment. The rate of unemployment, 3.5%, is forecast to fall further prior to increasing as economic growth slows.
• The Fair Work Commission minimum wage decision fwc.gov.au has resulted in increased wages bills in some instances. Inflationary pressures and the tight market for labour are also contributing in part to increased labour costs.
• Uncertainty around household spending behaviour is a key point of uncertainty for the RBA.
• The RBA notes a lot of work in the construction pipeline, especially in the residential sector. However, operators are once again facing constraints due to the labour situation, supply chain disruptions and weather disruptions in some regions.
• As one of the country’s major trade partners, China is a cause of concern. Specifically the way it has addressed the recent pandemic outbreak with shutdowns.

The RBA will next issue a statement of this kind in November 2022. Business Finance Resources and Planning Armed with this type of knowledge, especially the forecasts for inflation and economic growth, businesses may be better prepared to plan their acquisitions with finance. The information may assist in shaping how they would like the finance structured over the number of years of the loan, how much they should invest which may guide decisions around equipment models and makes and of course in regard to timing to capture the cheapest interest rates. The RBA has provided strong indications that additional cash rate rises will be forthcoming. These decisions have the potential to further increase business finance interest rates across many loan types. Timing purchases prior to critical RBA rate decisions can potentially present significant savings on interest payable on a loan. With their plans in place, business operators can utilise the resources and expertise of specialists in business finance – Business Finance Australia to assist in sourcing and structuring the necessary loans. While RBA outlooks focus on the big picture, our assistance is very much targeted to individual finance solutions. We source the specific loan type and offer that best meets the individual requirements of clients. Finance is individually negotiated and structured by trained consultants to specifically work with cash flow and towards achieving longer term financial goals. Contact Business Finance on 1300 000 033 to discuss how we assist businesses achieve finance objectives with workable cost-effective finance. DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.