The Credit Crunch
We are all reading about this, but what does it really mean?
Well, firstly, on an individual basis, mortgages will be harder to find, more expensive and less flexible, but they are still out there! More importantly, on a business basis, money will become tighter and banks will try to increase their margins and their charges. However, you can resist this. There are plenty of banks out there still open for business and if yours is trying to be too greedy, then make sure that you shop around!
To do this, you must have your figures up-to-date and be able to show exactly how well your company is doing, but, more importantly, what the forecasts are and what your requirements will be. This does mean producing a monthly cash flow and balance sheet to show what the security cover is and how much headroom you have. Your accountant should be able to easily do this, but if he can’t there are plenty of others who can.
I am constantly amazed how many businesses will pay significant amounts of money in extra interest and charges rather than do a bit of preparation and number crunching to enable another bank to quote for their business. This exercise alone is a vital business tool that should be regularly undertaken.
So, yes, there is a credit crunch but, as always, if you look forward and plan properly, it needn’t hurt your business.
April 2008