Suppliers ‘tightening credit policies’

Starting and growing a business is set to become more expensive as suppliers feel the effects of the credit crunch, research has found.

The survey, by credit referencing agency Graydon UK, found suppliers are tightening their credit policies.

More than half of those questioned said they are planning to make their credit criteria stricter, while just 2% said they were confident enough to ‘further liberalise’ their existing policies.

Martin Williams, the organisation’s managing director, said for entrepreneurs, this could be the determining factor in a decision not to launch a new product, service or business venture.

“Suppliers are looking long and hard at those companies who are asking them for credit,” he said. “With business insolvencies increasing at an alarming rate, the ‘safety first’ culture is spreading across all major industry sectors.”

"This is entirely understandable in a market where the sound management of cashflow could mean the difference between success and going to the wall."

He added that pressure on credit departments will also increase. “There’s no doubt pressure will increase along with the responsibility attached to ensuring credit policies are applied correctly as the full extent of the likely downturn is unveiled,” he said

“However, the safety first approach governing credit policy also applies to containing staff costs, and companies are seeking to avoid significant investments in additional staff at this time."

© Crimson Business Ltd. 2008