4 April 2008
Switch on the television or radio and all you hear at the moment is gloom and doom about the credit crunch.
Mortgages are not being issued in the same quantities, and banks like UBS continue to surprise analysts with write-downs connected with the current economic problems.
For the average reseller sitting there listening and waiting to see what the fall-out will be, there are clear signs that the wolves are getting closer.
Ironically for those companies reporting profits, the bizarre but frightening prospect looms of even those financially healthy players being unable to meet the requirements of the banks and, as a result, going out of business.
It might sound extreme, but for those facing mounting demands from the banks for more evidence they are a low risk it could get to the stage where, unable to produce money from thin air and without cash reserves, they might face real problems.
Add in the prospect that customers will not be able to pay the banks demanding more money and there comes a point at which it will become harder for those companies that have taken a laid-back approach to finances.
There will be some readers who think that even mentioning this issue on the front page is verging on the irresponsible. But it is better to be warned and as a result potentially prepared.
If there is one thing that companies should be doing in the next few months it is tightening up their own financial position. Basic book-keeping and a determination to chase bad debts are just some of the things that will protect against the future.
Along with getting into services and not being reliant on box-shifting, one of the mantras of recent years has been for resellers to use common sense in business. That is as vital today as ever it was. Those that fail to get on top of their finances will find the banks are not so forgiving
