How to Use Debt Factoring and Survive the Recession
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 challenging 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.
One of the most well know victims of the recession is Woolworths that went into administration just before Christmas. Its final shops closed on January the 5th, resulting in 27,000 staff loosing their jobs.
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 a business owner one of the first things you should do to survive a economic downturn is cut costs. Carefully review expenditure to identify any areas of your business where savings can be made. Look at distribution costs, advertising, marketing, business premises and even the simplest things such as turning off the office lights at the end of the working day. Simple measures can give rise to immediate benefits for little or no pain.
Cash Flow within a business is vital at any time but even more so in a recession and having access to working capital should be at the top of any business owners list. Funding a business with invoice factoring, which is increasingly popular for small to medium businesses. While not suitable for all Companies, the huge benefit of debt 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 factoring provider, less the service fee which has been negotiated with them. However, if the customer defaults on payment, then the factoring company will recover the money provided to you initially from any further invoices which are factored. This can lead to unpredictable cash flow if customers are poor payers or they go into insolvency.
The challenging 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.
One of the most well know victims of the recession is Woolworths that went into administration just before Christmas. Its final shops closed on January the 5th, resulting in 27,000 staff loosing their jobs.
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 a business owner one of the first things you should do to survive a economic downturn is cut costs. Carefully review expenditure to identify any areas of your business where savings can be made. Look at distribution costs, advertising, marketing, business premises and even the simplest things such as turning off the office lights at the end of the working day. Simple measures can give rise to immediate benefits for little or no pain.
Cash Flow within a business is vital at any time but even more so in a recession and having access to working capital should be at the top of any business owners list. Funding a business with invoice factoring, which is increasingly popular for small to medium businesses. While not suitable for all Companies, the huge benefit of debt 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 factoring provider, less the service fee which has been negotiated with them. However, if the customer defaults on payment, then the factoring company will recover the money provided to you initially from any further invoices which are factored. This can lead to unpredictable cash flow if customers are poor payers or they go into insolvency.
About the Author:
Debt Factoring is provided by the Asset Based Lending team of Enable Finance Ltd. Enable Finance are specialist corporate finance brokers providing British business access to traditional and alternative sources of finance. For a free meeting please contact the Business Refinance Team.
posted by Credit Counseling at
8:12 AM
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