There has been no stopping the rupee in the last few weeks. It’s free-fall against the dollar and the pound has left most businesses praying fervently.It’s depreciation of over 25% versus the US dollar since April 1 has some serious implications for business.It hit a new historic low of 68.75 against the US dollar in intraday trade yesterday. Indian stocks have taken a bad beating while the dollar is in a frenzy to leave the country. What is worse, Deutsche Bank has reportedly said in a note that “the rupee could slide to 70 to the dollar in a month or so, although some revival is expected by the end of the year.” Businesses reeling under economic pressure so far,seem to be in for tougher times ahead. Whether big or small, most entrepreneurs are finding it increasing difficult to wade their operations through the following situations. Impact Of The Falling Rupee On Your Business • Business Slow-down – The depreciating rupee has an adverse effect on the economy and results in its slow-down. Business sentiments are at an all-time low, with most companies adopting a wait and watch policy. It, therefore, is getting increasingly difficult to convert sales, to get more clients on board. • Increase in Input Costs – Input costs across categories see a northward climb, thereby straining your cost-sheet and affecting both gross and net profit. Since, most of this rise in cost is beyond your control, there is very little you can do to nullify or minimize its effect. • Affects Business Earnings – If the depreciation in rupee continues, it will further increase inflation. This, in turn, will affect your budgeted earnings. Take a hard look at your costs and see what best can be done to reduces expenses across categories such as salaries, rent, stationery, etc. • Difficult Borrowing Situation – The falling rupee and the rising inflation has made it a very tight regime for RBI’s monetary policy. With increase in credit rates, businesses are finding it difficult to borrow money, whether from banks or venture capitalists. How Best To Tackle The Falling Rupee? Well, that seems to be the desperate war cry. While nothing much can be done on the economic policy front, you could embark on to a belt-tightening initiative in order to do what best to curb costs and expenses at your end in order to beat the tough times. • Be Cost Effective – Start with a complete re-assessment of your costs and to cost effective measures, such as working from an office with lower rentals, or a home garage converted into an office in order to save on rentals. Similarly, get to smart stationery usage so that you can lower your printing costs and expenses on paper, cartridges etc. Lower your phone bills by using smart apps and technology. • Reduce Your Marketing Spend – Embrace the digital media in a big way, so that you can still create buzz on your products without having to spend much on the traditional methods of marketing. • Get Paid On Time – So that your operations are not affected by your cash inflows. It makes good business sense to have a sound credit policy. Once you are able to enforce your credit policy with your customers, money will keep coming in thereby not affecting your business operations. Wise men say that ups and downs are a part of life. It couldn’t be more applicable to businesses in today’s world. Key is to stay focused, stay confident and in positive spirits.
2013-08-30 00:00:00 2013-08-30 00:00:00 https://quickbooks.intuit.com/in/resources/money-finance/impact-of-the-falling-rupee-on-your-business/ Money & Finance English https://quickbooks.intuit.com/in/resources/in_qrc/uploads/2017/05/rupee.jpg Impact Of The Falling Rupee On Your Business
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