As companies use more and more credit, they start to lose track of the dangers. Business Rescue Service give their advice:
(1888PressRelease) March 22, 2011 - The Business Rescue Service reacted to breaking news that almost half of all small businesses in the UK are resorting to credit cards to 'improve' their cash flow. The headline was provided by a survey of 717 small-business owners conducted for Hilton Baird Financial Solutions six monthly Trend Index. Credit card funding was up since June last year, when the same researchers found that 35% were using the same risky funding method. The Business Rescue Service described the strategy as "concerning at a time when we are seeing so many cases of company insolvency".
The 2010 research indicated firms were increasingly using credit to fund their business activities. 49% relied on bank overdrafts to fund their business, with a further 35% also resorting to the cards. 88% had not secured any external funding during the previous 6 months. 23% reported loans from friends and family. Fast forward to the latest research and the reliance on 'unconventional funding' has increased. The same number were still reliant on bank overdrafts as a primary means of funding. A further 44% used credit cards to enhance their cash flow, with only 4% insured against bad debt.
"The problem is not that businesses should never use any form of credit. It's more the consequences of doing so either habitually or on a larger scale as a form of primary funding. The high interest rates are problematic, in that it is another cost to find each month. Unfortunately if Directors delay contacting us, sometimes it's not always possible to use the business rescue strategies we would have done earlier. The sooner we can work with them, the sooner we can collaborate closely to conduct an analysis into the businesses' financial status. Our findings can help firms to understand the risks they face and the health of the company. In some cases, we help directly with impending company insolvency".
The findings come soon after agreements on Project Merlin, the Government initiated deal with four major high street banks to increase business lending to small businesses. £76 billion pounds of new lending is to be made available to smaller businesses, an increase of 15% on the previous year's figures.
"We would suggest that firms contact us and allow us to asses the business status, even if they don't feel they are facing particular financial problems right now. We can help with a wide range of business problems, such as suppliers demanding outstanding invoices; HMRC tax arrears; and of course we advise on all the major formal solutions for both companies and sole traders."
Directors and managers can speak to the team for advice on day to day cashflow problems; Commercial finance; Voluntary Liquidation; Administration; Company Voluntary Agreements. There is also help for sole traders, who may find themselves personally liable for business debts. The team can be contacted on 0845 468 2395 or using their simple online contact form at:
As companies use more and more credit, they start to lose track of the dangers. Business Rescue Service give their advice: 
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