Invoice Factoring Could Help Survival in this 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.
Tough trading over Christmas and the New Year period has seen an unprecedented number of high street retails go into administration or liquidation.
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.
Possible one of the most high profile causalities of the economic collapse has been woolworths that went into administration in December 2007 and finally closed all retail outlets in January which has put 27,000 out of work.
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.
The credit crunch and lack of liquidity within the financial money markets has restricted traditional forms of lending from Banks into Businesses to very dangerous levels. This limitation of funding has implemented a Cash Flow Squeeze on British Business.
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 transport costs, advertising, marketing, business location and even the smallest 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.
Business owners interested in surviving a recession should look for alternative and appropriate sources of finance. The old clich of cash is king has never been more important than at the present time, although most businesses nowadays rely on some form of third party funding whether it be bank overdraft or business loans. Now may be the time to consider 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 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 finance 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 erratic cash flow if customers are slow payers or they go into insolvency.
Tough trading over Christmas and the New Year period has seen an unprecedented number of high street retails go into administration or liquidation.
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.
Possible one of the most high profile causalities of the economic collapse has been woolworths that went into administration in December 2007 and finally closed all retail outlets in January which has put 27,000 out of work.
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.
The credit crunch and lack of liquidity within the financial money markets has restricted traditional forms of lending from Banks into Businesses to very dangerous levels. This limitation of funding has implemented a Cash Flow Squeeze on British Business.
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 transport costs, advertising, marketing, business location and even the smallest 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.
Business owners interested in surviving a recession should look for alternative and appropriate sources of finance. The old clich of cash is king has never been more important than at the present time, although most businesses nowadays rely on some form of third party funding whether it be bank overdraft or business loans. Now may be the time to consider 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 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 finance 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 erratic cash flow if customers are slow payers or they go into insolvency.
About the Author:
Invoice Factoring is provided by the Asset Based Finance team of Enable Finance Ltd. Enable Finance are professional corporate finance company providing UK business access to traditional and alternative sources of finance. For a free consultation please contact the Business Refinance Team.
posted by Credit Counseling at
5:08 AM
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