Budget, Rates and Cash: How to Plan for 2027 with Confidence

At this time of year, it's tempting to treat the Budget as background noise and to leave next year's numbers until January.

We'd encourage you to look at them now. The Chancellor's Autumn Budget on 28 October has made several of next year's costs much clearer. Interest rates and energy prices are less predictable. Taken together, that makes November a good time to check that your plan still adds up, and that your cash position will carry you through whatever the next few months bring.

In our experience, the businesses that handle changes like these well aren't necessarily the ones with the best forecasts. They're the ones that know their numbers, have thought through a few scenarios and act early instead of reacting late.

This article offers general guidance for business leaders and is not financial or tax advice. Please speak to your accountant or adviser about your own circumstances.

How ready are your numbers? A quick self-check

Before you read on, answer these honestly:

• Do you know how much next April's wage increase will add to your annual costs?

• Could you say, today, what your bank balance is likely to be in 13 weeks' time?

• Have you agreed what you would do if costs or interest rates rose further?

• Have you reviewed your prices in the last six months?

If you answered "no" or "not sure" to two or more, the steps below will help.

1. Turn the Budget into your numbers

Headlines tell you what has changed. Your accounts tell you what it means for you. A few of the Budget measures are worth working through for most SMEs:

• Wages: From 1 April 2027, the National Living Wage (21 and over) rises from £12.71 to £13.21 an hour, and the rate for 18 to 20-year-olds rises from £10.85 to £11.27. For a full-time employee on 37.5 hours a week, the National Living Wage increase alone adds around £975 a year, before employer National Insurance and pension contributions. It's also worth considering the knock-on effect on pay differentials for people earning just above the minimum.

• Business rates: The threshold for 100% Small Business Rates Relief rises from £12,000 to £18,000 rateable value, and the tapered relief threshold rises from £15,000 to £21,000. Some businesses that pay rates today may pay less, or nothing at all, from next year.

• VAT: The £90,000 registration threshold and the standard rates are unchanged.

• Selling the business: The lifetime limit for Business Asset Disposal Relief is due to be cut from £1 million to £500,000. If an exit is part of your longer-term plan, it's worth discussing the timing with your adviser.

Take an hour with your finance lead or accountant, run these through next year's budget and note the total impact. A clear number is far easier to plan around than a general sense that "costs are going up".

2. Plan for more than one scenario

Going into November, Bank Rate stood at 3.75%. Inflation was above target, energy costs were adding pressure, and the Monetary Policy Committee was divided on whether a rise was needed. Nobody can predict exactly where rates or energy prices will go next, so it's sensible not to build your plan around a single assumption.

Instead, sketch out two or three simple scenarios and agree in advance what you would do in each:

Scenario	What it might look like	What we would do
Expected	Costs rise as the Budget sets out; rates and energy broadly stable	Deliver the plan, with prices reviewed in line with costs
Higher costs	Rates rise further and energy or supplier costs increase	Pause discretionary spend, bring forward price reviews, protect cash
Downside	Demand softens as well as costs rising	Prioritise core customers, review headcount plans, extend cash runway

The value isn't in getting the scenarios exactly right. It's in having had the conversation before you need it, so the leadership team can act quickly and calmly if conditions change.

3. Make cash visible

Profit tells you how well the business is performing. Cash tells you whether it can keep going. Many profitable businesses still get caught out by the timing of payroll, VAT, PAYE, loan repayments and quarterly bills.

A rolling 13-week cash forecast is one of the simplest and most useful tools a leadership team can have. Thirteen weeks is far enough ahead to give you early warning, and short enough to forecast with reasonable accuracy. There's a step-by-step guide at the end of this article.

4. Review your pricing before costs rise

April isn't far away. If your wage, energy or supplier costs are going up, waiting until they land and then raising prices in a hurry rarely goes well.

Start now:

• Know your margins by product, service or customer, so you can see where cost increases will bite hardest.

• Plan the timing of any changes, and give customers proper notice.

• Lead with value. Remind customers what you deliver and how you help them, rather than simply passing on costs.

• Look beyond price. Changes to minimum orders, service levels, payment terms or how you package your offer can protect margin just as well.

Most customers respond better to an early, honest conversation than to a surprise.

5. Tighten your cash cycle

Often there is more cash available inside the business than leaders realise. Three areas are worth a fresh look:

• Getting paid: How quickly do customers pay? Are invoices going out promptly and accurately, and is someone following up overdue payments every week?

• Paying suppliers: Are you paying earlier than you need to? Could you agree better terms with key suppliers, without damaging relationships?

• Stock and work in progress: How much cash is sitting on shelves or in unbilled work? Could you order little and often, or invoice in stages?

Improving each of these by a few days can free up more cash than you might expect, without taking on any new borrowing.

A simple plan from now to April

Period	Focus	What to do
November	Understand the impact	Run the Budget changes through next year's numbers, build your 13-week cash forecast and agree your scenarios
December	Decide and prepare	Agree pricing changes, plan customer conversations and finalise the 2027 budget
January to March	Act and communicate	Give customers notice of any changes, keep tightening the cash cycle and review the forecast weekly
April 2027	Absorb the changes	Implement the new wage rates, check performance against your scenarios and adjust if needed

A tool to try: the 13-week cash forecast

Here is a straightforward way to build one. A simple spreadsheet is all you need.

Step	What to do	Key question
1	Start with today's bank balance	What cash do we actually have right now?
2	Add expected receipts week by week	When will customers really pay, not just when they should?
3	Subtract known payments week by week	Have we included payroll, VAT, PAYE, rent, loans and key suppliers?
4	Calculate the closing balance for each week	Which week is tightest, and by how much?
5	Agree actions for the pinch points	What can we do now to improve the lowest point?

A few tips to make it work:

• Use cash, not profit. The forecast should reflect when money moves, not when it's earned.

• Be cautious with receipts. Base timings on how customers actually pay, not on your stated terms.

• Update it weekly. Roll it forward a week at a time and compare it with what actually happened. Your accuracy will improve quickly.

• Build it into your weekly check-in. If you're using the 30-minute leadership check-in from last month, the forecast fits neatly into the key numbers section.

Bring your team with you

Cash and costs aren't just a job for the finance function. Managers make decisions every day that affect margin and cash, from how they schedule staff to how they quote and how quickly they invoice.

Share the key numbers with your leadership team, explain what's changing and why, and agree what each area can do to help. People are far more likely to support decisions on pricing or spending when they understand the reasons behind them. Be open about uncertainty, too. A calm, clear message that "we've thought this through and we have a plan" goes a long way.

Set yourself up for 2027

The work you do now will make your planning for next year sharper and more realistic. You'll start January with a clearer view of costs, a pricing plan, a cash forecast you trust and a team that understands the numbers.

Three questions to ask your leadership team this week

1. What will the Budget changes add to our costs next year, and how will we cover them?

2. What would we do if interest rates or energy costs rose further?

3. What will our cash position look like in 13 weeks, and what could we do now to improve it?

If you can answer those clearly, you're already in a stronger position than many businesses.