UK companies are facing ever-increasing liquidity pressures as both available credit and cashflow falls.
Figures from the Bank of England indicate that the amount of cash companies had in available, unused credit facilities dropped by over 13 per cent in the 12 months to June 2008. May alone saw the biggest drop in available credit since records began in the late ’80s. This comes alongside falling levels of cash and bank deposits; two factors which are combining to adversely impact the liquidity of UK firms.
This news may not come as a complete surprise, but it serves as a timely reminder of the importance of effective and regular cashflow management.
A dwindling availability of both credit and cash has obvious implications for business liquidity. Identifying such downward trends as early as possible is crucial to planning measures to prevent such issues threatening a business’s current operational ability and its future survival and profitability.
Effective cashflow management should be high on any business’s agenda, whatever the economic climate. But now more than ever, as economic conditions are putting additional pressures not just on cash income but availability of credit, businesses must pay extra attention to the task.
Read our guide - Cashflow management: the basics
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