Firms are advised to protect cashflow with credit insurance
According to research from the latest bi-annual SME Pulse survey from Aviva, only 13 per cent of those businesses surveyed anticipate economic improvement in 2011 and almost one in 10 (nine per cent) fear they could go out of business if trading conditions do not improve.
The results revealed that business confidence has dropped by five per cent since autumn 2010, when 18 per cent believed the economy would improve in the coming year.
Meanwhile, accountancy firm Ernst and Young has recently reduced its forecast for growth of the UK’s gross domestic product (GDP) this year, from 1.8 per cent to 1.4 per cent.
High inflation rates along with wider, global fiscal developments, such as the recent economic crisis in Greece, are being blamed for the slowdown in the UK’s GDP and subsequent drop in business confidence.
However, growth opportunities, both at home and abroad, are becoming more prevalent for SMEs in a position to capitalise on them.
Lloyds TSB Commercial Finance suggests businesses cultivate a strong cashflow and put in place a credit insurance policy to ensure they have sufficient liquidity to invest in an expansion strategy.
Martin Walmsley, head of debtor insurance at Lloyds TSB Commercial Finance said: “These latest figures from Aviva and Ernst and Young highlight that businesses need to take all necessary precautions to ensure they are not affected by customers‘ adverse trading conditions.
“Our debtor insurance policy, which covers both UK and Export debt, safeguards up to 90 per cent of bad debt suffered, and covers both insolvent customers and protracted default. This provides our clients with peace of mind and increased confidence to make the most of the growth opportunities which are available.”