Using Invoice Factoring to Survive the Economic Downturn
Its now a blatant fact that the United Kingdom Economy is in decline and Company Directors interested in their Companies existence must have a plan or they will most certainly go into administration
The tricky trading conditions over the Christmas and New Years holiday season saw an exceptional level of shops go bust
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.
Another victim of the recession has been our beloved Woolworths that went into administration just before Christmas and saw its final stores close on the 5th of January 2009, which has left 27,000 people facing redundancy.
Businesses wishing to survive the recession need to have 4 things; credible management team, a viable business core, a valid business plan and appropriate funding say The Turnaround Management Association
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 an economy enters into recession one of the first thing a business should start consistently doing is keeping a tight rain upon costs. A firm hand upon expenses can save a business. Look at shipping costs, promotion and marketing, office premises and even the smallest things such as turning off the office heating at the end of the working day.
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 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.
The tricky trading conditions over the Christmas and New Years holiday season saw an exceptional level of shops go bust
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.
Another victim of the recession has been our beloved Woolworths that went into administration just before Christmas and saw its final stores close on the 5th of January 2009, which has left 27,000 people facing redundancy.
Businesses wishing to survive the recession need to have 4 things; credible management team, a viable business core, a valid business plan and appropriate funding say The Turnaround Management Association
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 an economy enters into recession one of the first thing a business should start consistently doing is keeping a tight rain upon costs. A firm hand upon expenses can save a business. Look at shipping costs, promotion and marketing, office premises and even the smallest things such as turning off the office heating at the end of the working day.
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 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 Lending team of Enable Finance Ltd. Enable Finance are professional corporate finance brokers providing British business access to traditional and different types of credit. For a free consultation please contact the Business Refinance Team.
posted by Credit Counseling at
8:02 AM
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