John Shaw, Partner at Bentleys Chartered Accountants, looks at how the so called “credit crunch” is likely to affect the owner-managed or average SME business in Bolton.

The media stories about the banking world, and the economy in general, tend to be focused upon the effect for individual consumers, home owners or the larger companies and ‘UK plc’.  But smaller companies are also finding that the going is getting tougher. 

All is not lost, however, 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 current banking facilities.  If there is a downturn in your business, you’ll be in a weak negotiating position with any lenders, so prepare now. How much might 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 tightening up their lending.  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 Bentleys.  So please make the most of our expertise and skills to help you bolster your business, and ensure you are ready for any potential storm that may be hitting your sector or market.  It doesn’t have to be ‘doom & gloom’.  If you make sure that you have carefully reviewed your own situation and made appropriate plans, you could find that this economic climate can bring some great opportunities too.
For more information please contact John Shaw at Bentleys Chartered Accountants on 01204 388675 or visit www.bentleys-accountants.co.uk

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