Small UK firms 'in a strong position'

02/04/2008

Small firms operating in the UK are in a string position to withstand the pressures they are likely to face if the economy falters in months to come, according to the British Bankers' Association (BBA).

Debtor finance has been used by many small firms as they look to maintain a productive cashflow and the high street banking sector increased the scale of its assistance to the sector in recent months.

The BBA reports that small British businesses have a collective overdraft with their high street banking providers of around £8.7 billion at the end of last year.

Additionally, the association has revealed that more than half a million new relationships were struck up between its members and small companies across the country over the course of last year.

"The main high street lenders continue to finance investment, while business liquidity has risen, suggesting that small businesses in general are in a good position to withstand pressures in the economy," said BBA statistics director, David Dooks.

Tim Rigg, head of Bank of Scotland Corporate, told the Times recently that managing cashflow is a crucial aspect of running any successful business.