How South East business cope with cash flow squeeze
10 June 2009- Only 15% of companies* in the South East are using bank loans, down from 19% in December 2006
- 13% of businesses are turning to family or business partners for finance compared with 9% in December 2006
*small and medium sized firms (under 250 employees), surveyed by Business Link
Firms in the South East are finding their cash flow has been affected by shorter terms from more suppliers, more late payment from customers or both, according to Business Link’s Credit and Cash Flow in the Recession Report. Across industries there is a marked difference, 61% of construction firms reported a change in payment terms compared with 35% of those from the retail, tourism or other sector. On average 46% of South East SMEs were affected by changes in payment terms.
Banks and lenders are also changing their conditions. One in six (15%) of SMEs seeking new finance or credit arrangements are doing so because their current provider withdrew the facilities or changed the conditions. Of those, seeking new arrangements, 31% have had difficulties doing so.
Richard Holmes, Business Link Regional Finance Manager, comments:
"Adequate cash flow is the life blood of a business, and we know how difficult it can be to manage. My tips are:
"Understand how the cash flow in your business fluctuates daily through the month. If you establish the patterns for their cash flow and find opportunities you can match your billing and payment schedules.
"If you need external finance, go and speak to a Business Link adviser. We can identify the best source of finance. Its amazing how much has changed in the lending market over the last 12 months, and we can help to demystify the jargon, and help to outline your options."
Mark Yelland, MD of Brighton based Harmony carpets, said, "My Business Link Adviser, Jon Love, came up with suggestions on how we could avoid bad debts and manage our money more effectively. The advice made good sense. I’m now getting more information and forecasting from our accountant. We saw Business Link again to check that we had handled the changes correctly and now we feel much more certain about the future."
Business Link provides information, advice and referrals to sources of funding, other business support or professional services such as accountants. To find out how they can help you, or to book a free business review ‘Health Check’, call Business Link South East on 0845 600 9 006, or visit their website.
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