Credit Crunch Payments Slowdown

The papers have been filled with news of the credit crunch and speculation about its possible impact, but until recently it didn't feel like it had really started to affect the "average business man on the street" beyond being a bit more cautious. Unfortunately, that appears to be changing.

Credit Crunch Hits the Construction Sector 

As you may know we help lots of businesses that have cash flow problems for one reason or another, often for positive reasons like rapid expansion. However, the other day was the first time that someone contacted us and said that their cash flow problem had been caused by the credit crunch and the slow down in debtor payments that it has caused.

This particular business were supplying glass to the construction sector which has been most directly affected by the lack of availability of credit i.e. fewer mortgages, fewer house purchases, less cash to pay for the glass that has already been supplied. The lesson of previous downturns in the economy has been that whilst the contruction sector may be the first to suffer it has a knock on effect in almost every other area.

Take Action Before Its Too Late 

Fortunately the glass business had the good sense to seek some help in time, and it came in the form of factoring (finance against outstanding invoices and professional help collecting in payments), but it is likely that there will be many more businesses that leave it too late.

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Posted: 16th of June 2008