02/02/2012 - Double-dip recession? Who will help mid-sized companies?

With a double dip recession looking increasingly likely who can help mid-sized companies

Bankers ?

During 2011 Lending to small businesses (<£1m turnover) was falling at a rate of 10% per annum and to mid-sized companies (<£25m turnover) by 6% (Source Bank of England). Whether the reduction in lending was down to businesses choosing to pay down debt, or is being forced on them by the banks, is a point of contention.

While ‘asset backed finance’ is still available anecdotal evidence from our clients suggests Euro-zone fears are leading banks to claw back unused facilities and to get tougher on new lending.

Politicians?

A decade of ‘prudent’ spending (aka running a deficit), plus bank bail outs, unfunded pensions, ageing population, and ‘deficit’ reduction plans which still include real term spending increases leaves no scope for grand initiatives. Timing and impact of Credit Easing scheme uncertain.

Bank of England?

Record low interest rates are helping borrowers and boosting GDP but this is offset by high inflation eroding the spending power of many consumers.

After a decade ‘controlling inflation’ to meet their 2-3% target (aka sitting on hands while imported deflation offset high domestic inflation and choosing to ignore rampant house price rises) the bank of England acknowledges its own limitations in controlling imported inflation and cites inflation as the lesser of two evils when compared to strangling GDP with interest rate rises.

Quantitative easing measures are helping bank liquidity but the direct impact on the economy in general is uncertain. In the medium term, the reversal to normal interest rate levels will only dampen GDP.

Europe?

Nothing but downside. Impact too uncertain to predict.

On your own? Well almost

With no dramatic improvement in the economy in general Directors and Managers must take responsibility as best they can and deal with pressure borne out by:

- 43% of companies seeing increased competition during 2011
- 26% of companies seeing an increasing impact from late payments in 2011
- Even large, branded companies are failing
- Access to bank funds is an increasing problem for over 10% of businesses
This means:

- Regular forecasting
- Proactive credit control
- Detailed credit checking on customers

- These can be time consuming tasks, however a range of products priced from £300, plus optional tailored training and support, are available from Well Keen to help mid-sized customers.

Forecasting – foreCASH, Winforecast, Sage Financial Forecasting, Excel
Credit Checking – Credit Guardian
Credit Control – Credit Hound, Credit Safe