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| How to Use Debt Factoring and Survive the Recession |
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| Written by Phillip Evans |
| Sunday, 18 January 2009 17:18 |
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Its official the British Nation is now in financial recession and businesses need to have a robust map to navigate this economic downturn or they are destined to go into administration. Tough trading over Christmas and the New Year period has seen an unprecedented number of high street retails go into administration or liquidation. Stores and Companies to be effected by the economic downturn are Savvi the music retailer formerly Virgin Megastore, Adams the Independent childrens clothes retailer, USC the Fashion store and Whittard of Chelsea, the specialist tea and coffee retailer. One of the most well know victims of the recession is Woolworths that went into liquidation just before Christmas. Its final shops closed on January the 5th, resulting in 27,000 staff loosing their jobs. A business owner should be thinking how can I survive this economic slump? The Turnaround Management Association says that for a business to achieve a successful turnaround it needs four things; a credible management team, a viable business core, a valid business plan and appropriate funding. British Business is now facing a Cash Flow restriction caused by the credit crunch and and freeze in the capital markets forcing Companies to search out unconventional methods of finance 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 premises 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 finance such as invoice factoring, which is increasingly popular for small to medium businesses. While not suitable for all businesses, the huge benefit of invoice 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 unpredictable 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 meeting please contact the Business Refinance Team. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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