The Credit Crunch – What Now for UK Businesses in 2008?
The sudden reduction in the availability of credit and increase in the cost of obtaining loans means that the current UK credit crunch is not just a matter for the banks and the stock markets; it will also have a big impact on both small and medium sized businesses.
The British Chambers of Commerce has warned that businesses should brace themselves for a ’long slog’ before the credit crunch is over, with the economy set to be even weaker in 2009.
“As the economy tightens, it is more important than ever to understand and manage your company’s finances”, commented Martin Hyman, independent financial director at Manchester based Rosh FD. “Hopefully we will not go into a full blown recession, but it is critical to plan now for this possibility. The process of financial planning will often identify efficiencies. These can be adopted even if we do not enter a full economic downturn, but if things do get tight, you will be prepared”.
One thing for certain is that money will not be as forthcoming from banks. Cash management and financial planning for businesses will assume an even greater importance. It will no longer be enough just to say that the finances “will sort themselves out”. If your bank facility is due for renewal, your manager, who may have been friendly and amenable in the past, will be taking a much closer interest in your business plans and financial prospects than they would have before.
Equally, it is important to consider the finances of other related businesses, not just your own. For example, how well financed are your major customers and suppliers? What level of exposure do you have to potential bad debts or even to just a slow down of receipts? Could the loss of one of your main suppliers have a significant impact on the quality of the service that your business provides?
For more information on how to best plan your businesses’ finances to beat any downturn in the economy and to find a part-time financial director take full control of your company’s finances for the economic climate ahead, visit http://www.roshfd.co.uk for more details or call Martin Hyman, independent financial director from Rosh FD on 0161 282 2429.
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- Rosh FD
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