New Year crucial time for cash flow, says Bibby

With commentators suggesting signs of real recovery won’t appear until spring 2010 at the very earliest, Bibby Financial Services is calling on business owners and managers to ensure they have their finances in order to help them avoid recessionary cash-flow pressures.

Bibby Financial Services’ Business Factors Index, which reveals key findings about the UK economy and small businesses, shows that the final quarter of 2009 and the start of 2010 will see trading conditions worsen.

This compliments statistics published earlier this year showing that slumping demand for British-made goods, coupled with difficulty in accessing finance, forced 38 per cent of SME manufacturers to cut jobs in the three months to January 2009.

Edward Rimmer, chief executive of invoice financier Bibby Financial Services, said: “January is a crucial month for businesses and it can often be make or break. With large amounts of excess stock from Christmas often left over, financial liquidity can take a big hit as cash flow is tied up in unsold stock, and many customer invoices are left outstanding.”

January 2009 saw a 78 per cent surge in business failures, said Bibby.

Edward Rimmer continued: “During these challenging times, it’s hardly surprising that business owners are continually exposed to the threat of business failure. Businesses really feel the pinch after Christmas and many ensure they are as frugal as possible during the first few months of the New Year.”