Duncan Macintosh, Partner
Some say that the recession is easing. And it might be true that we sail into calmer waters faster than some other pundits expect. But it is certainly not true that life for many businesses is going to get massively easier before the end of the year.
Some businesses are doing very well. For instance, we have a client who manufactures and retails fast and convenience foods across England and Wales. Their business sails on as if the credit crunch had never happened. But, most of their sales are for £5 and less and paid in cash.
For other businesses it’s cash that is the problem, and the problem arises because of the parlous state of the commercial banks. Whatever they may be saying, and for reasons that one can fully understand (they need to sort their own problems out first) hardly anyone is lending in the commercial market. None of the Government initiatives to date appear to have had any demonstrable effect; borrowing money to finance a business is as hard as it’s ever been.
And this means that everyone in the business cycle struggles to get paid; because everyone’s customer is hoarding cash, and reducing its own costs, as aggressively as it can.
Until there is more cash at the coal face of business, allowing businesses to settle promptly with their creditors, and giving them the confidence to place orders with their suppliers, it’s hard to see when business life will get any easier. The macro economic stuff is all very fascinating, but business life is usually no more complicated than “following the money”.
Duncan Macintosh T: 029 2047 4488 E: d.macintosh@capitallaw.co.uk
