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Inflation on the Rise: Protect Your Business

Written by Michael DeFelice | Apr 2, 2021 8:39:06 PM

If you've been following the new lately you know that inflation is on the rise. The commodities market has been seeing an increase. Post-pandemic inflation is definitely a possibility as more cars end up on the road and the demand for goods and services increases. There are specific ways to protect your business while the market fluctuates. Keep reading to learn how!

 

Inflation on Commodities

 

Commodities such as petroleum, lumber, copper, steel and food products have been on the rise. JPMorgan Chase & Co. said earlier in February that commodities appear to have begun a new
supercycle -- an extended period during which prices are well above their long-run trend. That echoes similar comments from others including Goldman Sachs Group Inc. Commodities have seen four comparable cycles over the past 100 years. These mega-trends in commodity growth bode well for high demand over a medium to long term. These swings have a large impact on the cost of living for people on a global scale. Everything from the price of fuels, power, food and construction projects. This is the highest these commodities have been since at least 2013. Squeezes on the supply side caused by the pandemic have caused rallies because of the scarcity of these goods. Depending on your businesses' purchasing power these costs will need to be mitigated through changes in pricing or seasonal changes to your sales cycle.




Post-Pandemic Inflation

 

As industries recover and demand increases following the recovery from the pandemic, inflation is sure to follow. This inflation may be high in the short-term but as we've seen following the World Wars it will rubber band back to normal levels eventually. During this period of higher-than-usual inflation you'll have to make changes to your business to weather the storm. Weak inflation at the start of the pandemic means prices may rebound this year. The Fed says it will stand aside and keep interest rates low to help inflation meet its 2% target. Some estimates show an increase to between 2.5% and 3.5%. So far, based on measures of market expectations, investors seem to believe it will rise and stay that way for a certain amount of time. The most important tools you need are ways of monitoring your margins, ways to update your prices to compensate for costs, and the ability to edit your material costs on products that you manufacture.

 

Tools to Bolster your Business

Monitoring your margins

Using Order Time you can monitor your margins, set a total margin on Sales Orders, set a total margin percentage and a total markup. These tools were added in our 1.0.28 release and you can see more about it in the Webinar below.

 

You can roll up costs within a Bill of Materials as well by having a standard cost for each component that you use to produce your finished good.

 

You will also be able to review or change price, review total cost, change dollar margin, percentage margin, and total percentage markup. You can also make multiple Bill of Material versions so that you can have a specific version you used in the past and the one you use for these new circumstances.

Modifying Your Price Levels

Price levels driven by cost are important for bolstering your business to handle not only the supply costs but also the possible increase on demand as we recover. 

The Price Levels profile list within Order Time helps you set up and track discounts (reductions) and markups (increases) of your regular pricing for the goods and services you sell.

There are 3 classes of price levels as follows:

    • Company - applies to all items and customers
    • Item - price level assigned to items (e.g volume discounts)
    • Customer - price levels that are assignable to customers

You can also use the Assign Start/End Dates function to set your prices to rise or fall during certain intervals. This is especially helpful for promotional periods or times of high cost/high demand.

Additional Price Level Resources

Price levels driven by cost are important for bolstering your business to handle not only the supply costs but also the possible increase on demand as we recover.

Adding Price Levels

Types of Price Levels

Price Level Webinar

 

The Forecast Ahead

 

The Fed still plans to keep interest rates near zero for an extended period, helping support the economy until the job market is fully recovered and inflation is on track to moderately exceed 2%. Several participants in the meeting suggested that could happen in 2022 — up from just one who thought so in December.

"The path of the economy will depend significantly on the course of the virus, including progress on vaccinations," the Fed said in a statement. "The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook."

A forecast released recently shows Fed officials now expect the economy to grow at a rate of 6.5% this year, up from 4.2% that was projected in December.

Unemployment is now expected to fall to 4.5% by year's end. That's an improvement from the 5% unemployment rate that was predicted three months ago.

A bulge in pricing is expected for a short-term period and you can utilize Order Time Inventory to protect your business and take advantage in the boost to consumer spending!

 

What Now?

Love everything you’ve read? Order Time has even more to offer. Sign up for a one-on-one meeting to get all your questions and concerns answered, or check out our detailed video tutorials and knowledge base. Order Time is constantly updating, so check out the latest release notes


Feel free to call our sales representatives, 1-866-278-6243, dial 1 for Sales or visit our website for more details!

 

We're always adding new Features, so if you have one you can't live without, let us know using the Contact Us Form.
For more information check out our Order Time Cheat Sheet.
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