Our feature ‘Making cash flow’ highlights the pitfalls of poor fiscal management, and while it’s the larger firms’ ‘mishaps’ that grab the headlines, it’s the smaller players’ faux pas that tend to be life-threatening, in a business sense at least.
Aside from the obvious, such as making sure you get paid on time, there are a number of ways to protect your operation from cash shortfalls, all of which are highlighted in our feature. One of the most common, especially for smaller firms, is making sure you have a big enough borrowing facility to see you through the lean times.
At a meeting of Asset Based Lenders last week, organised by Menzies Corporate Restructuring, the good news was that the general mood seemed to be one of optimism. Although several spoke of 2006 as being a record-breaking year for business failures. However, they said that the overall effect of ‘survival of the fittest’ had been a positive one, hinting that as a result, lenders’ confidence in the sector was improving.
But before we all break out the party poppers and perhaps chequebooks, this comes at a time when inflation rose to 3.1%, which many believe will force the Bank of England to increase interest rates to 5.5% or possibly even 5.75%, either way, to their highest since 2001.
So while it may be easier to borrow money, it’s certainly not going to be getting any cheaper, in the short term at least.
And all this goes to prove that keeping a tight control on your company’s purse strings has never been more important. And key to that, as obvious as it sounds, is making sure that the cash comes in faster than it goes out, which sadly in our industry is no mean feat.
Darryl Danielli is editor of PrintWeek.
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