There is no avoiding the issue the UK Economy is in recession and if you are a business owner you must have a plan to survive this economic slump or you will most certainly fail.
The tricky trading conditions over the Christmas and New Years holiday season saw an exceptional level of shops go into insolvency
The following stores and Companies, to name a few, have gone into administration. Wedgewood the fine China and tableware manufacturer has gone along with Savvi, USC the Fashion store and MFI the furniture retailer.
Another victim of the recession has been our beloved Woolworths that went into administration just before Christmas and saw its final stores close on the 5th of January 2009, which has left 27,000 people facing redundancy.
How can a business survive this recession? Well Alan Tilley of the Turnaround Management Association says that for a business to achieve a successful turnaround it needs four things; a viable business core, credible management team, a valid business plan and appropriate finance.
Traditional sources of finance have been restricted to very low levels due to the Credit Crunch and lack of liquidity within the money markets. This constriction of lending has brought about a Cash Flow squeeze on UK plc.
As an economy enters into recession one of the first thing a business should start consistently doing is keeping a tight rain upon costs. A firm hand upon expenses can save a business. Look at shipping costs, promotion and marketing, office location and even the simplest things such as turning off the office heating at the end of the working day.
Cash is King and Company Directors looking to avoid the pain caused by an economic downturn should seek out alternative sources of funding such as invoice factoring, which is increasingly popular for small to medium businesses. While not suitable for all businesses, the huge benefit of invoice factoring is that rather than have money tied up in invoices that are yet to be paid, you can receive an initial payment up front, typically 80% – 85% of the gross value, and the remainder when the customer pays the invoices to an invoice finance provider, less the service fee which has been negotiated with them. However, if the customer defaults on payment, then the finance company will recover the money provided to you initially from any further invoices which are factored. This can lead to unpredictable working capital if customers are poor payers or they go into insolvency.
Debt Factoring is provided by the Asset Based Lending team of Enable Finance Ltd. Enable Finance are professional corporate finance brokers providing British business access to traditional and alternative sources of finance. For a free meeting please contact the Business Refinance Team.
Tags: Business, Business Finance, Debt Factoring, economy, factoring, Finance, Invoice Factoring, money