Using Debt Factoring to Survive the Economic Slump
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 bankrupt.
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 liquidation in December 2007 and finally closed all retail outlets in January which has put 27,000 out of work.
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 Alan Tilley of the Turnaround Management Association
British Business is now facing a Cash Flow pinch caused by the credit crunch and and freeze in the capital markets forcing Companies to search out alternative sources of funding
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 distribution 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 factoring provider, less the service fee which has been negotiated with them. However, if the customer defaults on payment, then the finance 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.
Debt Factoring is provided by the Asset Based Finance team of Enable Finance Ltd. Enable Finance are specialist corporate finance company providing British business access to traditional and alternative sources of finance. For a free meeting please contact the Business Refinance Team.
