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SMEs’ Recession Nightmare Continues
11th August 2009
Two in five business owners are losing sleep over the
economic crisis.
For the past year, SMEs have languished in arguably the worst trading
conditions in living memory. Insolvency statistics are currently running at an
all time high with 5,110 new corporate liquidations reported in Q1 2009 – up
7.8% on the previous quarter* – with those businesses who have weathered the
storm faced with a tide of bad debt, customer failure and poor credit terms.
HA staggering 44% of small business owners, equivalent to 2,068,000*
individuals, have admitted suffering sleepless nights worrying about the
economic crisis according to new research from Close Invoice Finance (Close),
part of the FTSE 250 merchant banking group, Close Brothers Group plc.
The latest Small Business Finance Barometer from Close, based on a survey of
over 500 SME owner managers, also found that seven in 10 owner managers are
significantly more stressed as a result of the economic downturn with almost
half (43%) confessing it has had direct impact on their home life.
In the 2008 Close Small Business Finance Barometer, 13% of owner managers
admitted that the downturn had had an adverse effect on their closest
relationships. This latest research reveals this has more than doubled, with 30%
of business owners now admitting relationship problems with their partner due to
the economic crisis.
David Thomson, Chief Executive Officer of Close Invoice Finance said:
“With the
insolvency service reporting 5,055 new corporate liquidations in Q2 2009 – up
2.9% on the previous quarter** - it is no surprise that so many business owners
are feeling the pressure. We continue to discuss the economic crisis in macro
terms, ignoring the strain that managing a business through a downturn places on
your personal life”.
David continued:
“For their own peace of mind, it is crucial that owner managers
adopt a robust attitude to risk and consider how best to safeguard the long term
health of their business during today’s difficult trading conditions. Cashflow
management tools can, for example, help by providing protection against the
negative consequences of late payment and bad debt.”
As the results underline, business owners are finding it increasingly hard to
cope in today’s hostile economic environment. But, despite the challenging
conditions, there are ways to mitigate business risk and secure funding if SME
are prepared to shop around. Invoice finance is an ideal route to securing
funding that allows companies to raise cash quickly and easily against their
sales ledger, affording businesses a greater degree of flexibility, control over
their cash flow and hopefully a restful night’s sleep.
