3 Mins
The recent budget has unveiled a significant change for UK businesses: an increase in Employer National Insurance Contributions (NIC) to 15%. This increase will undoubtedly impact businesses across various sectors, particularly those with sizeable workforces. While this may feel like a financial curveball, businesses can mitigate these effects by proactively planning and adjusting their financial strategies.
Strategic forecasting is one of the most powerful tools at your disposal to navigate this change. It equips you with insights into staff costs, sales targets, pricing strategies, and more — helping you make informed decisions to maintain profitability and support sustainable growth.
Understanding the Employer NIC Increase
For companies employing numerous staff or offering competitive salaries, the increase in employer national insurance contributions to 15% and the reduction of the threshold on which national insurance becomes payable could represent a significant increase in a business’s annual expenses.
Without preparation, this increase may put a strain on cash flow, impede investments, or affect workforce planning. However, by leveraging robust forecasting tools and techniques, businesses can identify solutions to help absorb an element of these rising costs while maintaining financial stability.
How Forecasting Can Help Your Business
Forecasting isn’t just about crunching numbers; it’s about using data to drive smarter decision-making. Here are the key ways it can empower your business to handle the increased Employer NIC:
1. Calculate Projected Staff Costs
The first step is understanding the full impact of the NIC increase on your payroll. By forecasting your wages and salary costs, you can identify the areas where adjustments may be necessary — whether that’s in hiring plans, bonus structures, or other HR costs.
2. Identify Sales Growth Targets
Higher expenses mean many businesses will need to increase revenue to maintain their profit margins. Forecasting lets you pinpoint the sales growth required to offset additional NIC costs.
3. Aid Pricing Reviews
Rising costs often prompt businesses to revisit their pricing structures. Forecasting enables you to simulate the effects of price adjustments, ensuring they cover increased expenses without alienating your customers.
4. Evaluate Fixed and Variable Overheads
The NIC increase is an excellent opportunity to review all business expenses. By analysing both fixed and variable costs, forecasting helps you identify savings or efficiencies that could offset rising payroll expenses.
5. Support Investment Decisions and Workforce Planning
Forecasting doesn’t just focus on immediate challenges; it provides a long-term perspective. It helps businesses decide where to allocate resources — whether that’s in staff, technology, or infrastructure — and ensures that decisions align with overall financial goals.
Introducing Fathom: The Ultimate Forecasting Tool
To make the most of forecasting, you need the right tools. That’s where Fathom comes in. Fathom offers powerful three-way forecasting, combining Profit & Loss, Balance Sheet, and Cash Flow into a single, streamlined view.
Why Choose Fathom?
- Seamless Integration: Fathom connects directly with leading accounting software solutions such as Xero, Sage, and QuickBooks, as well as having the option to import Excel spreadsheets.
- Customisable Reporting: Tailor forecasts to suit your business needs, whether you’re planning for the next quarter or the next 3 years.
- Actionable Insights: Fathom’s graphical reports and dashboards help you identify trends, evaluate performance, and make data-driven decisions.
By using Fathom, you can simplify the forecasting process, ensuring you stay ahead of the Employer NIC increase while remaining agile and prepared for future challenges.
Why Act Now?
The sooner you start planning for the NIC increase, the better equipped your business will be to navigate the changes. Proactive forecasting empowers you to:
- Mitigate financial risk by understanding the full impact of rising costs.
- Adapt swiftly to changing economic conditions.
- Preserve profitability while maintaining workforce morale and customer satisfaction.
Ready to Future-Proof Your Business?
Preparing for the Employer NIC increase doesn’t have to be overwhelming. With the right tools and guidance, your business can turn this challenge into an opportunity for growth.
Get in touch today to learn how Fathom can help you create tailored forecasts and empower your business to thrive, no matter what the future holds. Use our contact form to schedule a consultation—we’re here to help you succeed.