Will there be a double dip?

15th September 2011 13:24

It’s been three years since the start of the recession but have we really seen the end of it and is there a risk of a double dip?

Looking at the wider picture, it may well come down to the fragility of the US and European economies and if the G8 leaders can come up with a strategy to avoid another country becoming bankrupt. However at either a macroeconomic or local level, it may well be as simple as injecting a bit of confidence into owner managed businesses.

Many of the business professionals that I speak to report that some of their clients are having very good years and are growing rapidly, some are bumbling along and a small majority are what are being termed “zombie companies”, avoiding insolvency only as a result of creditor forbearance.

I recently read an article about a survey undertaken by Hilton-Baird Collection Services in conjunction with Credit Today Magazine into late payments. The survey showed that companies typically wait an average of 22 days beyond the agreed credit limit to receive payment, with 67% reporting an increase in the time taken to be paid.

In my opinion this is just one of many issues which on their own are not insurmountable but accumulatively could spark a double dip. Whether it is the increase in the energy prices such as petrol or electric, customers taking longer to pay or everyone’s desire to keep hold of cash; they all bleed confidence from an already faltering economy. This is compounded by the changes made by the banks making the availability of investment and borrowing for small businesses harder to access.

I don’t think there will be a double dip recession but what the past three years has shown is that it is not easy to be in business and you need to be alert to what is happening in your market place and be poised for change.

« Return to full list of blog articles