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The spare cash British companies have available has fallen to the lowest level
since the early 1990s.
Companies are also digging into their credit facilities at the fastest rate
since 1992, when the country was last in recession.
According to statistics from the Bank of England, from the 12 months to June
2008 the amount companies had in available, unused credit facilities dropped by
13.3%.
Chris Baguley, managing director of Bridging Finance Limited, a short term
funding specialist said it’s a trend that will continue during 2008.
He commented: “Every business encounters cashflow difficulties at some point and
this isn’t necessarily connected to the credit crunch.
"Clients who fail to pay on time, loss of customers or suppliers, or increases
in the cost of materials or overheads are some of the contributors to cash flow
problems for businesses in 2008.
“Many businesses are delving into overdrafts which can prove disastrous as banks
can call in these borrowed funds at any time.
“Short term loans are more flexible and help companies through cash flow issues.
"These loans can act like plugs for your finances, stopping them draining away
before it’s too late. We’ve seen an increase of 70% in deal proposals to around
20 per week.”
Source: Credit
Control Journal
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