Fuel price hikes put small businesses under major cash-flow pressure

Janus Joubert | image supplied

Effective 7 October 2026, 95-octane petrol increased by R3.33 a litre, while diesel rose by between R2.84 and R3.24 a litre, depending on the grade.

For a business using 2,000 litres of diesel a month, the increase translates into an additional R5,680 to R6,480 in monthly fuel costs, assuming consumption remains unchanged. The higher prices could put further pressure on businesses already operating with tight margins and limited cash reserves.

Janus Joubert, managing director at JBS Advisory and Accounting, says business owners need to assess how rising input costs affect the financial sustainability of their operations.

Rising costs threaten profit margins

Fuel increases can affect more than a business's direct transport expenses. Suppliers also face higher distribution costs, which can feed through into the prices businesses pay for stock, materials and other inputs.

Businesses that absorb these increases to keep prices competitive risk generating the same revenue while retaining less profit. Those operating under fixed-price contracts may be particularly exposed if they cannot adjust their prices to reflect rising costs.

“The fuel hike puts pressure on all input costs because suppliers also feel the burden, meaning they have to hike prices for products to get to you. You must also make sure you take extra care and effort with your buying,” says Joubert.

He advises businesses to scrutinise purchasing decisions and identify where costs can be reduced without compromising quality.

Practical measures include comparing supplier quotations, consolidating orders, reviewing delivery arrangements and calculating the profitability of individual products, services and contracts rather than focusing on turnover alone.

Cash flow requires closer attention

Rising expenses can also widen the gap between a business's reported profitability and the cash available to pay its bills.

A company may have confirmed sales and outstanding customer invoices but still struggle to cover salaries, rent, supplier payments and debt repayments if customers pay late.

Joubert's advice is to strengthen cash-flow management before the pressure becomes a crisis.

Businesses should maintain rolling 13-week cash-flow forecasts and update them weekly, accounting for expected receipts, operating expenses and upcoming financial commitments. They should also follow up on overdue invoices and speak to suppliers before payments fall behind.

Where costs have made existing prices unsustainable, businesses may need to review their pricing or renegotiate contract terms, taking customer affordability and market conditions into account.

Borrowing may deepen the problem

The impact of higher fuel prices extends to consumer demand. Households facing higher transport and other essential costs may have less disposable income for non-essential goods and services, leaving some businesses exposed to rising expenses and weaker sales at the same time.

Taking on additional debt to cover a cash shortfall can make matters worse if the underlying business is not generating enough cash to meet its commitments.

Before borrowing, business owners should establish whether a shortfall is temporary, perhaps because of delayed customer payments, or structural, caused by persistently high expenses and insufficient revenue. They should also calculate whether repayments would remain affordable if sales declined further.

Five ways to limit the impact

Joubert recommends that businesses take practical steps to reduce their exposure to rising operating costs:

- Recalculate costs: Work out how much the fuel increases add to monthly expenses and identify the products, services and contracts most affected.

- Improve transport efficiency: Optimise delivery routes, consolidate trips and monitor vehicle fuel consumption.

- Tighten cash-flow management: Update forecasts weekly, collect outstanding invoices and plan for major payments in advance.

- Review pricing and supplier agreements: Check whether prices cover the full cost of supplying goods and services, and negotiate terms where possible.

- Be cautious with borrowing: Establish whether additional funding will resolve a temporary cash-flow problem or merely delay a more serious financial shortfall.

For small businesses with limited financial buffers, the priority is to identify the effects of higher costs early and respond before they undermine the ability to meet essential obligations.