There is no avoiding the issue the UK Economy is in recession and if you are a business owner you must have a plan to survive this economic slump or you will most certainly fail.

Tough trading over Christmas and the New Year period has seen an unprecedented number of high street retails go into administration or liquidation.

Retailers and Businesses that have already been bore the brunt of the recession and have had to go bankrupt are MFI the furniture retailer, Whittard of Chelsea, the specialist tea and coffee retailer. and Wedgewood the fine China and tableware manufacturer.

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.

How can a business survive this recession? Well Alan Tilley of the Turnaround Management Association says that for a business to achieve a successful turnaround it needs four things; a viable business core, credible management team, a valid business plan and appropriate finance.

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.

Company Directors with an eye on survival should immediately have a plan to reduce expenditure within the business. Carefully review expenditure to identify any areas of your business where savings can be made. Meticulously going over the Companies expense to find areas where costs can be cut. You should look at Telephone Charges and Tariffs, Utilities, Trade Suppliers, distribution costs. The build up of a number of cost saving can be remarkable.

Cash is King and Company Directors looking to avoid the pain caused by an economic downturn should seek out alternative sources of funding such as debt factoring, which is increasingly popular for small to medium businesses. While not suitable for all businesses, 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 finance company will recover the money provided to you initially from any further invoices which are factored. This can lead to unpredictable working capital if customers are poor payers or they go into insolvency.

Debt Factoring is provided by the Asset Based Lending team of Enable Finance Ltd. Enable Finance are specialist corporate finance company providing UK business access to traditional and alternative sources of finance. For a free meeting please contact the Business Refinance Team.

Tags: Business Finance, business-info, Debt Factoring, economy, Factoring, Finance, Invoice Factoring, Money