Since the beginning of September I’ve been meaning to send out a newsletter. I’ve been holding back to see if:

·         The world was going to end – it didn’t or at least it won’t until next year when they fix the Large Hadron Collider on the Swiss French border. What is a Hadron anyway?

·         Whether any pure Investment Banks survive – they didn’t, now that the remaining two big beasts have changed their status. Again as a simple commercial banker I never did quite get what the “masters of the universe” actually added – obviously neither you nor I are gloating or enjoying schadenfreude in any way shape or form!

Turning to the real world difficulties are being suffered by Importers with the decline of sterling against both the US dollar and the Euro. 

Conversely these changes are good news for Exporters making their sales more competitive.

Hindsight is a wonderful thing but it does bring home the benefits of forward contracts for the purchase or sale of currency.

Many people I speak to are under the misapprehension that the rates are set in anticipation of future currency movements, they are not. They simply reflect the difference in interest rates available in different currencies. The benefit of using them is to lock in profit at Current exchange rates.

Much had been written about the causes and effects of the Credit Crunch and I don’t intend to repeat those observations again. However one thing I think is unarguable is that we are in a Recession now. I read a recent article in the Telegraph business section written by Richard Tyler interviewing one of the founders of Alchemy Partners. Whilst I think he was being unduly pessimistic about the depth of any recession facing us now, I did agree with strategies he recommended for surviving the downturn amongst which were:

·         Control and preserve your cash

·         Control your Debtors – carry out rigorous credit checks and chase debts when they become overdue sooner rather than later. It is an unfortunate fact of life that the older a debt becomes the less likely it is to be paid.

·         Preserve your borrowing facilities

·         Make sure you have a realistic and sensible Cash and Sales forecasting model in place.

·         Look at your cost base and revisit costings.

He did make other recommendations, which if everyone implemented them would ensure a deep recession, but in many ways they are sensible. Amongst them are cutting back on Stock levels, delaying Capital expenditure, and looking at all overhead costs.

The good news however is that the lenders are still lending, albeit pricing has risen and unrealistic proposals don’t stand a chance – but it is in no-one’s interest that they should. If your supplier of finance is not being helpful then talk to me on contact details are below.

For those of you who run Companies you may be aware that various changes to Company law are being implemented on 1st October details, I received an e-mail from Companies House; further details can be found on http://www.companieshouse.gov.uk/companiesAct/implementations/oct2008.shtml

The main change from a Finance perspective seems to be the abolition of the restriction on providing financial assistance to a Company to buy its own shares.  It was generally possible to get round this restriction by going through the whitewash procedures but these could be costly. Talk to your Company’s lawyer or accountant for fuller advice on this and other changes and how they affect you.

And now for the Sales plug:

Do you need or wish you had a larger overdraft facility?

Do you want to buy new equipment?

Do you want to buy your own business premises?

If the answer to any of these questions is yes then contact us