Is recession over? What does this mean for business finance?

According to the economists, the latest figures showing 0.1% growth over the last quarter means, officially, yes, recession is over. However, this is not as clear cut as it may seem. Whilst the numbers may indicate the first growth in 15 months, the actual percentage growth was predicted to be higher, around 0.4%. Economists still predict that it could take up to a further two years to see the UK economy return to anything like that of pre-recession 2007. This, coupled with the potential threat of increases in tax and national insurance contributions, mean many SME’s are still either struggling, anxious or extremely cautious about where this could leave them in the short to mid term, and feel let down by the lack of support offered by banks and the Government. So what to do? Without being too gloomy, the absence of easily accessed credit and finance is likely to continue, with the threat of a ‘double dip’ or ‘mini dip’ (back into recession) still being discussed. But with a glimmer of hope on the far horizon, now is still the time to remain positive and get your business into the best financial shape it can be. Here are some fundamental, but essential tips. Tighten up your number crunching – a recent survey from Business Link showed that nearly 50% of SME’s aren’t managing payment processes effectively nor are up to speed with crucial figures such as break even point and gross profit margin - a key performance indicator. Get support for you financial processes – this is vital and worth the money! Cut spending – sounds totally obvious, but do a closer review on all business related overheads, especially bills and cut out all absolutely non-essential everyday items that seem crucial but you could probably get by without, at least temporarily. Think carefully about human resources – if you can employ casual or freelance staff to deliver what you need, then great, but think twice about trading committed and experienced staff for temporary labour, especially for anything specialist – it could damage your business in the longer run and ultimately be a false economy. Try to address and manage debt – OK, so the banks aren’t our favourite people at the moment, but ignoring any issues or debt that could become a problem, won’t make it go away. Have the conversations about your issues – if anything arises in the future, registering concerns or asking for help early on, will stand you in better stead than calling up once you really need baling out. Those finance support specialists working with you to keep your numbers on track, may also be able to offer advice and specialist help. Outsource your financial management completely - For those businesses that have held their own and are managing to sustain a relatively healthy turnover and profit, or those who are managing expansion or development, there are financial solutions to help support your growing business such as factoring and invoice discounting. This takes away the payment process headache altogether and ensures fast payment upfront and consistent cash flow. This can be especially useful for the types of businesses that need to pay out significant amounts on a regular basis for payroll finance, such as recruitment firms.