Member Article

Beat the credit crunch

With Colin Grimston of Business Link

In an era of growing uncertainty heralded by the credit crunch, Business Link is helping small and growing companies meet the potential challenges ahead.

Higher interest rates and a reduction in the availability of funds means that small firms may struggle to secure bank loans, as well as face a host of other difficulties.

These problems could be compounded by a potential slowdown in demand for goods and services and debtors who are unable to pay their bills, seriously disrupting cash flow and threatening expansion plans and even survival.

Thankfully, help is at hand to assist your business combat the effects of the credit crunch. By logging onto www.businesslink.gov.uk/northeastcompanies can receive advice and guidance on managing cash flow in the current climate and identifying and preventing potential financial disasters.

Methods include defining a credit policy that clearly sets out standard payment terms, issuing invoices promptly and regularly chasing outstanding payments. Businesses are also encouraged to closely monitor changing market conditions, including interest rates which have an influence on the general trading climate.

Managing cash flow is not the only way of preparing to survive the credit crunch. The website offers a range of tools and guides on areas including increasing efficiencies to save money, particularly identifying where money can be saved by going green. Increasing environmental awareness encourages companies to work in ways that conserve energy and materials, improving cost control.

The Business Link website also provides a business health check which companies can use to discover if they are sufficiently prepared.

The health check can be used to analyse key areas, including finance and administration, with the aim of identifying and avoiding future problems and improving business performance. It asks a number of questions which help identify potential difficulties before they arise.

Managing risk is an important way of preventing crises from happening. It focuses on identifying what could go wrong, evaluating which risks should be dealt with and implementing strategies to deal with those risks. Businesses that have identified the risks will be better prepared for the impact of the credit crunch and have a more cost-effective way of dealing with any difficulties faced.

An effective risk management policy can increase the likelihood of success as it helps businesses allocate capital and resources more efficiently and anticipate what may go wrong, minimising the need to react to a situation and preventing disaster or serious financial loss.

Business Link’s substantial team of expert brokers operates across the region in local access points and on a mobile basis. For further information about Business Link visit www.businesslink.gov.uk/northeast or call 0845 600 9 006.

This was posted in Bdaily's Members' News section by Ruth Mitchell .