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Does the business finance sector need John Wayne?

11th Aug 2011
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The business finance sector took a huge knock this week as the Western economic superpower waved the white flag and admitted that it is going to be tough for at least the next two years, which was roughly translated as minimal growth for the next half decade.

Unfortunately for all of us, there was no John Wayne to add: “When the going gets tough, the tough get going.” Obama might try to rally the troops, but if the US loses traction for nearly five years, the European economies, already punch drunk from decades of over-spending and lack of fiscal control, are going to find themselves in the middle of a perfect storm.

The implications for the business finance sector are huge. If you thought the management of cashflow was crucial over the last few years, it’s now going to have to be a fine art. One step out of place and the banks will signal that you’re business loans have been called in: resistance futile. Finance directors who know how to use invoice finance and factoring to keep the cash flowing will be worth their weight in gold.

America played its hand over the last few weeks and discovered that bluffing just wasn’t enough. The politicians thought it cool to show the world how a shoot out on Capitol Hill meant that they could stick to their party principles, no matter what. The markets digested the stand-off over the rising of the debt ceiling another few trillion as a sign that the lunatics were now running the asylum.

Then came a downgrading of the American sovereign rating and then suddenly reality of what they’d done hit home. Playing chicken with the national deficit was a massive own goal and made the country look out of touch.

The game was finally up when the American Central bank put out a timely announcement – maybe just to slap the politicians across the wrists – that they would keep interest at the current lows for at least two years. In other words, expect five years of dormancy.

The towel has been thrown into the ring and no US cavalry is about to charge over the hill and rescue struggling UK firms.

We’re on our own folks.

To find out more about Selective Invoice Discounting and how we can help call… 0845 6188 515

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