With the war in Ukraine still ongoing, sanctions have continued to increase over the last week, all to try to stop the fighting.

There are designed to be hard-hitting for Russia, however, none of this of course is without consequence here. This week I thought I would take a look at this, what this could mean for us and how we should get ready.

Taking a step back

Only 2 weeks ago, before all this started, there was already plenty of concern about a potential cost of living crisis in the UK.

Natural gas prices were spiking due to winter demand and low supply over the winter and this had already had fallout in the energy sector. Many energy suppliers ceased trading, forcing customers onto standard tariffs… standard tariffs that are due to increase by 53% for the average household in April.

A 53% increase in energy costs is significant for most people, many businesses and adds further stress to cash flow. Cash flow that may already be stretched by the COVID pandemic and supply chain issues, both globally and due to Brexit.

And now Ukraine

Against all this backdrop, we now have the invasion of Ukraine, with associated sanctions, which is now adding a further shock to the system.

Natural gas, the source of much of the heating and electricity generation in the UK has hit another record high. It is now 6-7x the long-run average, much of which has yet to be factored into the price caps domestically.

Wheat, a proxy for base food costs, is not much better, with so much production for Europe from Ukraine and Russia, future supply shortages has forced the price to record highs too… and of course, energy is involved in food production and distribution too… food costs will be up.

And, whilst these are scary graphs, I feel I do need to point out that all of this is a lot less scary than what the folks in Ukraine are facing these days… what we really need is for the invasion and fighting to stop as soon as possible.

Economic impacts

This being said, and should nothing change, we also need to prepare to manage significant impacts should this flow through to the global economy.

Food shortage may lead to civil unrest, energy shortages to further conflict and extended sanctions to a more permanent dislocation of the global economy and its integrated supply chains. All of this adds to the inflationary cycle, pushing prices up, companies out of business and affordability down, beyond what we have seen through the COVID pandemic.

In collections/receivable processes, this could result in a massive wave of arrears volumes flowing through, as customers struggle to make existing payments and commitments.

What to think about now?

There is of course the possibility that governments will step in to help mitigate some of this, and the situation may improve as quickly as it seems to have arisen.

However, should nothing change, by the end of the summer we could start to see this impact and now is the time to get prepared for increased volumes in collections… I have added some thoughts on this below.

• Use digital processes to reduce the cost of simple or repetitive tasks. Lean on digital transformation to free up resource for use elsewhere in more complex processes (such as handling difficult customer situations)
• Consider investing now, don’t delay. If inflation takes hold and prices do increase, you are better paying for infrastructure now, rather than waiting when we are in the middle of a crisis and may not have the revenue to afford it.
• Understand and plan your capacity plan. Post-digital transformation, understand and plan your capacity requirements. How will these be met? What will trigger hiring, What is the ramp up time? and how is this impacted by different scenarios? Stress test your plans
• Review your financial difficulty and vulnerable policies. With so many customers in potentially difficult situations make sure you have your forbearance tools, procedures and vulnerable customer management processs in place to help support. A customer helped here, if done well, can afterall be a customer for life.
• Don’t forget reporting and control. Invest in monitoring and MI. This is critical to understand when something has changes, when to trigger your plan, map impacts on your business and its profitability. Early development here can provide early insight and help avoid an awful lot of difficult decisions later on.
• Lastly, remember your team. Your employees may also go through a hard time with this personally too. Have a plan, be proactive and make sure they are supported too. You will need all the help you can get if things get tough.

With so much going on, it can sometimes be hard to think proactively and take control. Just waiting to see what happens seems easier, but can lose you time and cost more money (as we saw with those that were not ready with the flexibility needed during the early days of the COVID pandemic).

It has likely been at least 40 years, if not longer, that we have ever seen price increases as we have in the last 2 weeks. Some of this speaks to our global interconnectedness but also points to the importance of being prepared. A bit of thought now, while we have time, for modest cost, could save an awful lot of effort later on.

In the meantime, if you, like me, are watching the news and twitter constantly, let’s just hope the conflict is over soon and everyone gets to go safely home soon.

I don’t know about everyone else, but I have had trouble sleeping recently. Ever since Thursday I have been horrified by the events unfolding in Ukraine. How can this happen, these days and change just so quickly? What is happing is just awful, the invasion needs to stop.

This is not to say that these events don’t happen elsewhere, they do and some are still happening… but watching events unfold, on our doorstep in Europe and with so many posts in English, has really brought it home… shattering a perceived sense of peace and stability.

Weekly video

So on Thursday, I could not post my normal video, it just did not seem appropriate… and with the situation on Friday, Saturday, and Sunday really not getting much better (worse actually), I have been finding it increasingly hard to concentrate, knowing what is happening elsewhere.

Suddenly concerns over the COVID pandemic, the energy crisis, inflation have all been put into a new priority. Daily chores such as doing the shopping, fitting in the school run, even cleaning the house now seemed more important… normal life and normality is something we clearly need to treasure more.

Start of a new week

With today being Monday, I have cheered up a bit. Not that I am normally cheery on a Monday, but with work to throw myself into it has been a distraction…

But, I did ponder if other people may also have been feeling the same. It is not a cheery subject I know, but in this always-connected, always-on, other people who may also be feeling like this – if you do, you are not alone.

Talking and sharing can help and if you have a team at work, it may be worth checking in with them today or tomorrow too.

What can we do?

And… although we may feel powerless to meaningfully help, there are things we can still do, no matter the conflict and whatever country we are in… be vocal on calling out inhumanity… be intolerant of it whenever you see people being treated badly… make your views known… stick up for those that are in less fortunate situations… help if you can… not always easy I know, but I also know we have to try.

For now, I am praying for safety for everyone in Ukraine and for the fighting to stop.

Pets do seem to be playing an increasing role in many of our lives. Indeed there seem to be quite a few folks I know who acquired a dog during lockdown, who are now becoming features on work video calls and no-one minds anymore too. It is great.

‘Dogs have owners… cats have staff’.

In my house, no dogs, but there are cats… 2 cats. Now, I would not say I am a cat person… but somehow they do wiggle their way into your heart, so that you no longer mind when they walk all over your keyboard when you’re composing that important email to your boss or start scratching at your door, which you shut to concentrate for that important video call, all because well, the door was shut… it is, after all just a cute thing they do.

Now with a single pet, this human interaction undoubtedly is charming… but with 2, a new layer of interaction unfolds. Not only do you get your interaction, but you also get to watch how they interact with each other too.

And, having spent way too much time, at home, with pets, during lockdown, what I have come to release is that there are extra layers of cat politics and dynamics I simply did not understand before.

Reality check

In my human reality, for years I simply thought one of them was timid, running away at the slightest noise I made… yet now I discover that maybe the real problem is not me, the human… but actually the other cat…

This is the friendly one, but in cat world I am beginning to suspect may actually be just the pushy one, intimidating its way around the other just to get more food. Through observation, my perspective has changed.

And, needless to say, with increasing age, and a less active lifestyle it is leading to weight gain… (for the cat this is!)… the result being they are now fed separately on calorie-controlled diets… with the pushy-one, has now taken to rattling the door petulantly, making noises to get the food it desires. Whilst the other, now simply meows at me politely and gently to get fed.

The result, one now gets fed the right prescribed amount at the right time, the other pretty much gets fed on demand, has doors opened and generally gets whatever it wants… and this situation has forced the observation back to the human world.

Being kind can create soft power

Yes, I know, maybe it is not fair and maybe I am showing favourites, but more subtly what my reaction it does go to show is that sometimes being kind and gentle, can be more powerful than being pushy in getting what you want.

It really is an illustration of ‘soft power’ and influence… all in my living room.

Have a good week everyone.