Surviving the Effects of the Credit Crunch

With the UK economy facing a potentially prolonged period of uncertain economic conditions, businesses must continually review their financial support and arrangements.

The central issue is the banks themselves; they are a critical business partner of any organisation but as they reduce their lending and request more security, gaining access to working capital may become increasingly difficult. What can you do to ensure that the credit crunch doesn’t constrain your growth and have a detrimental effect on your business?

Tips to Survive the Credit Crunch:

1. Assess the commitment of your bank – make sure that your bank will support you in this uncertain market.

2. Diversify your financial dependency – Asset finance should be conducted away from your main banking relationship and with specialists in
their field, thus opening new credit lines and spreading your finance risk.

3. Nurture your cash reserves – “turnover is vanity, profit is sanity and cash is reality”. The use of leasing and invoice finance can be of real
benefit to fund strategically critical investments, speed the collection of debtors and to ensure that cash remains on the balance sheet.

4. Explore all your funding opportunities – forward thinking businesses are well advised to review sources that can maximise cash availability.
An example being the sale and leaseback of existing vehicles or machinery.

5. Plan your business strategy and financial needs – make sure you have a structured plan setting out the full financial plans of the business
for at least 2 years ahead.

Now is a good time to review the structure of your business finances which should include a review of your banking arrangements, assessing levels of capital expenditure and ensuring by using finance you can build a strong cash reserve to take advantage of opportunities and safeguard against downside risks.

Pace Equity can help with arranging property, asset, vehicle and invoice finance, as well as introducing independent business banking advice. If you would like any further information on how we can help you with your banking and finance arrangements, please contact Pace Equity on.

T: 01491 577889