Firm News
Surviving the Credit Crunch
Paul Salisbury, partner from Murphy Salisbury chartered accountants looks at how the so called “credit crunch” is likely to affect the owner-managed or average SME business in Warwickshire.
The media stories about the banking world, and the economy in general, tend to either be focused upon the effect for individual consumers, home owners or the larger companies and ‘UK plc’. But we are now also starting to see some worrying signs that smaller companies, our typical clients, are hitting some tough times ahead.
However, all is not lost and there are things you can do to prepare and protect yourself and your business. Firstly, make sure you are managing your working capital and there’s an overall positive cashflow, rather than a cash drain. Look at your credit control procedures – tighten them up; Don’t pay your suppliers earlier than the due date you have agreed; Review your stockholding policies; Make sure your business systems are slick and efficient; Watch petty cash expenses – get trade accounts instead where possible; Review your overheads and purchase ledger costs.
Secondly, look at your banking facilities now. If there is a downturn, you’ll be in a weak negotiating position with any lenders, so prepare now, whilst you have time How much will you need? Good projections are invaluable for forward planning; Who are your lenders? Are you spreading your financing risk between more than one supplier? Are you using the most appropriate facility for your needs?
We are generally finding that the more traditional banking solutions are becoming less common, and banks are definitely tightening up their underwriting policies. More security is being required and the facility costs are going up. However, there are still many more routes for finance. We have the personal contacts, know all the products, and can advise you on which is most appropriate and make the necessary introductions.
In fact, you can get help for everything mentioned above from Murphy Salisbury. So please make the most of our expertise and skills to help you bolster your business up, and get yourself ready for any potential storm that may hit your sector or market. It doesn’t have to be ‘doom & gloom’ if you make sure that you carefully review your own situation and plan ahead. You could really find that this economic climate can bring some great opportunities too.
To find out more about how working with our leading firm of accountants in Stratford-upon-Avon and Warwickshire can help you, please contact us.
