Credit Squeeze

It appears that many businesses are suffering a cash “squeeze” from delayed payment of their invoices as the credit crunch begins to impact on the economy. There are complaints from businesses that some large customers have begun to extend their payment period terms. This is putting a strain on the cashflow of businesses.

According to the Times, the Federation of Small Businesses estimates that 10% of small business collapses are triggered by late or non-payment of bills.

Stephen Alambritis, head of government affairs at the federation, said:

‘A number of big customers have raised their payment terms because of the credit crunch. It is becoming an area of concern. Normally businesses would go to their banks when they need more cash but that is not easy at the moment.’

Internet links: Times online and FSB website