In its pomp Clinton owned more than 1,100 shops and had 25% of the greeting card market. With associated buying-power they pushed the envelope and paid manufacturers as little as 30p for a card they sold for £3. With 8,000 staff and rents said to exceed £80M it was a model that relied on sales, sales and more sales. Where did it all go wrong?

Following the banking crisis, high street footfall mirrored reductions in consumer confidence that was further stifled by government austerity measures. Forced to shop around, consumers found supermarkets and the internet offering lower priced cards, with the latter offering personalisation. Cash flow problems now hit Clinton, restructuring resulted and branches closed.

Ironically, it was to the banks that Clinton went for help to ease their cash flow problems with Barclays and RBS providing them with a total of £35M. The banks ultimately gave temporary waivers for 'technical breaches' before deciding to sell the loans to American Greetings (Clinton Cards biggest supplier) who, you've guessed, called in the loan!

If circumstances conspired against Clinton, it's clear that they responded too slowly to changing market conditions. Herein lies a lesson for all businesses big or small, B2B or B2C. The inability to meet the demands of creditors can seriously damage the health of a business. Witness our own recent research undertaken in partnership with the Forum of Private Business among SMEs on the topic of payment trends.

According to our survey 59% said they pay late, either intentionally or unintentionally, with 77% of these citing late payments by their own customers as a reason. Other factors leading to late payments include: insufficient funds 70%, and a lack of affordable finance from banks 55%. So what can you do to protect your cash flow?

Saying "no" to business is always an option. There is little point taking credit information only to ignore its advice. There is even less point getting paid late yet continuing to supply. When all the signals tell you that your buyer is having problems, heed the signals, be brave and say "no."  However, once you have a customer, there is much you can do to get them to pay.

Step up your collection activity; use your directors and your sales people to contact your buyer, use e-invoicing, and make pre-due calls and get a commitment to pay. Remember that companies owe money but people pay bills. Polite persistence pays.

(ct)

But take a moment to look beyond the politically charged access to finance maelstrom and you quickly realise that the issue of tighter bank lending policies is just one part of the business credit equation. After all, surely nobody wants a feast of reckless, speculative lending followed by an inglorious spate of failures.

From a credit perspective, this puts the onus on businesses themselves to proactively manage their credit profiles, and ensure that the rating agency community is able to present them in the best possible (and accurate) light, so they and their business partners can trade with confidence on the basis of optimised credit decisioning information.

That's the principle anyway. But getting your accounts in order counts for nothing if your cashflow situation looks as desperate as Chelsea's rearguard action against Barcelona in last week's football encounter.

And it's here that the issue of having robust credit control procedures in place comes to the fore. A new report published this week by Graydon UK and the Forum of Private Businesses suggests many firms could do better in this respect.

The poll of 500 companies revealed that only 44 per cent had formal credit control procedures in place, 38 per cent mixing formal and informal approaches, and the remainder seemingly making it up as they went along.

It's a case of 'not so happy go lucky' though as the survey highlighted also how the late payment of trade invoices is still impacting 51 per cent of companies. And of those affected, one in five say they've nearly been put out of business as a result.

So as the late payment culture persists, companies need to stay on the backs of those customers who withhold cash. Traditional British reticence to ask for payment is not what the Doctor should be ordering here. Our study found that when companies do take proactive steps to chase late payers, such as telephone contact, stringent credit checking or simply refusing to complete future projects, the late payers are often kicked into action.

In the meantime, Graydon is one of the organisations, along with the afore-mentioned FPB, the Institute of Credit Managers, and indeed Lloyds TSB which is vocally seeking Government action to stamp out late payment.

But with the best will in the world, success on that front isn't going to be achieved overnight, and in the interim everyone seeking to grow their bottom line needs to take their own credit decisioning seriously. It could save your (business) life.

For a full copy of the Graydon UK report on late payment, produced in partnership with the Forum of Private Business, click here

The main area of concern for the sector include the challenges linked to the availability of affordable finance and the continuing pressure being brought by HMRC following the cessation of the "TTP" ( time to pay ) scheme. This arises from the fact that over 95% of winding up petitions are presented by HMRC. Tax collection is a high priority. The Government needs all the money it can lay its hands on. Major projects are scarce, even more so since the completion of projects relating to the London 2012 Olympics and it is doubtful that the Government will change its cost cutting stance on future building projects, certainly not in 2012 and probably not for the first half of 2013.

The Office of National Statistics has found that the level of insolvencies for the fourth quarter of 2011 and first quarter of 2012 were lower than in the corresponding period for 2010/11. Whilst that may be true, results show that this broad view does not necessarily apply to the construction sector.

An area which does provide a cause for concern is the lack of affordable finance available. Major lenders are not overly supporting businesses and SMEs are still struggling despite the range of government schemes and incentives available. The banks are simply not playing ball and this has led to alternative lenders entering and consolidating their position in the market place with higher interest rates and ultimately higher costs. This increasing trend is often referred to as suicidal selling. Companies are being pressured to sell at any cost by their existing lenders in order to generate revenue. However, this can lead to businesses finding themselves at breaking point as their cash flows begin to take a hit.

Credit insurers remain very wary of any business operating in and supplying to the construction sector and cover is hard to come by in many cases, if at all. However, it is difficult to lay blame with credit insurers as in the past two years a large percentage of claims and pay outs came from the construction and non-food retailing sectors.

Self-insurance, to a certain degree is a fact of life in 2012 as it was in 2011 with or without credit Insurance. Sales are important as they are the life blood of any company. However, now more than ever, credit managers are challenged with tackling changing payment terms and bad debts.

Buyers are very conscious about keeping existing suppliers happy. They are therefore more forthcoming in supplying additional information, be it management or draft accounts or supplying details of the coming year's prospects, new work in the pipe-line and who they are selling to or working for.

Some helpful tips: ask questions, it will help you build up a better picture of who you are dealing with and what state their business is in. Work with your sales team, not against them. You, as a business will benefit from this in the long run as the sales team will pick up on information on how your customer is performing.

Finally, question your credit information supplier as well as your credit insurer. Remember that you both need each other.

Despite this sounding gloomy, I am confident that better times are ahead.

Colin Sanders

Head of Intelligence, Timber

Graydon UK Ltd

If you would like to know more about Graydon UK Ltd and in particular it's Timber Intelligence Network, call Colin Sanders or Melanie Morgan on 020 8515 1405 / 1488.

With the government expecting the private sector to drive the economic recovery, why is their plan failing? Big business is neither spending nor investing; instead it accumulates vast cash piles and waits for market conditions to improve. SMEs see their expansion plans thwarted by increased overheads, weak customer demand and the high cost and availability of finance. A tale of the haves and the have-nots.

Small wonder then that Ernst & Young's ITEM Club - representing our 'prosperity party' - "expect growth this year of 0.4%, half the government's own Office for Budget Responsibility forecast." The Federation of Small Businesses' Voice of Small Business Index - representing our 'austerity party' -  "finds weak consumer demand, utility costs and access to finance the most likely barriers to achieving the largely sanguine growth aspirations of its members."

So, with the prosperous taking money out of the economy and the austere having little to give to it, risk averse businesses stunt growth. Order books aren't expanding and jobs aren't increasing. For big business it's surely the time to loosen the corporate belt, and for SMEs it's surely time for the banks and alternative lenders to loosen their fiscal belt?

Companies must also be instilled with the confidence to extend trade credit to one another. The ability to showcase their financial strengths and potential for sustainable growth are vital in achieving this. Ensuring they have reliable, correct and predictable customer creditworthiness data to enable them to assess risk and do business assuredly is paramount.

This is why we continue to urge government to protect and support the integrity of data held on businesses at Companies House. What a business has done in the recent past is a clear guide to what it will do in the near future, making its filed accounts essential for the credit reference industry to help companies transact with confidence and optimise their credit decision-making capacity. We're absolutely behind the headline scheme but this can't come at the cost of forgetting other forces which help finance flow through the economy.

In its UK risk bulletin for 2012, Euler Hermes said it had begun the year with a sense of nervousness, as it expected levels of insolvencies to remain at an extremely high level. It added: "It is clear that it is not just smaller entities failing. Insolvencies are not increasing in volume, but are definitely increasing in size".

Euler Hermes provided a further insight into the thinking of the sector in a recent report on the global economic outlook. It highlighted the food, pharmaceuticals, automobile manufacturers and chemicals sector as "holding firm", but raised concerns about retail, air transport and construction companies in Europe.

"When the crisis hit in 2008-2009, trade credit insurers had a lot of companies for which they couldn't get quick information and they had to act very quickly, in the face of greater than expected losses. There was too much insufficient data. They've certainly learnt their lesson and have since built their databases up significantly. Their risk assessment is much better."

As a result of these requirements and the increased risk of greater insolvencies, brokers are saying that overall, the cost of such insurance is expected to rise this year. Richard Talboys, trade credit leader at Willis, says: "When you look at the Euro crisis, the Greek issue, and the downturn in public spending - you do question many product lines and the fear is from the insurers that their will be a few big ones (failures) on the horizon.

From SMEs to larger firms, some would argue, we may see a slight upward trend in the demand for credit reporting and monitoring. This will however, depend on the perceived value that firms place on their risk.  Whether you insure your credit risk or not, it is always prudent to rely on credit ratings and reports that are approved by major credit insurance companies in order to base your decisions on  the best information available.

(je)

But these credit easing measures alone will not be enough to deliver the sustainable growth that UK companies are crying out for. Companies also need to be instilled with the confidence to extend trade credit to one another. The ability to showcase their financial strengths and potential for sustainable growth is key to achieving this. Ensuring they have reliable, accurate and predictable customer creditworthiness data to enable them to assess risk and do business assuredly is also crucial here.

This is why we're urging the Chancellor to do everything he can to protect and maintain the integrity of data held on businesses at Companies House, which is an essential part of enabling the credit reference industry to help companies feel assured they can transact with confidence and optimise their credit decision making capacity. We're absolutely behind the headline scheme but this can't come at the cost of forgetting other forces which can help finance flow through the economy.

View video http://bit.ly/GNqvAS

Hosted by Economia editor Richard Cree, the panel considered what the likely impact of the government announcements will be on business and stimulating UK growth. Danielle Stewart, of Baker Tilly, Gordon Skaljak of Graydon UK and Sarah Buckley of ICAEW analyse what the 2012 Budget means for UK business and medium sized firms. http://bit.ly/GGdYjr

This webinar was screened live at 4pm on 21.03.12.

Based on data published today by the commercial credit referencing agency Graydon UK, the number of corporate insolvencies during the first quarter of 2012 were also 22.8 per cent down on the same period three years ago (2009).

The numbers of insolvencies in the first quarter of this year (2012) were 3.7 per cent lower than the same period last year (2011). Furthermore, company failures in the first quarter this year are down by nearly 5 per cent (4.4 per cent) compared with the last three months of December 2011. This suggests that company liquidations will continue to decrease this quarter.

The good news is we are seeing a decrease in the number of business failures. However, although the threat of a double dip recession may appear to be receding, it is still important for businesses to identify both opportunities and risks if they want to increase their businesses efficiency and bottom line growth.

This quarter's Graydon UK Insolvency Predictor has found that the number of insolvencies in the manufacturing sector has decreased slightly following the peak at the end of last year. According to a recent UK Trade and Investment report, the UK is one of the top manufacturers in the world and Government initiatives such as 'Made in Britain' and 'Going for Growth' are targeted at helping production businesses in order to rebalance the economy.

Whilst support for small and medium sized manufacturing firms exists, in the current economic climate, access to finance is still a challenge for all businesses. Many firms find it difficult to keep their heads above water, putting their suppliers on shaky ground.

However, there are a number of ways businesses can protect themselves from insolvency. Firstly, businesses must ensure that they prevent themselves from the damage caused by late and non-payments. Running regular credit checks is vital for businesses and it will mean that businesses will be alert to any changes in their customers' circumstances that could lead to non-payment in the future.

It's also important that businesses build up a strong credit rating in order to be able to secure alternative sources of funding quickly should their cash flow take a hit. This takes time and businesses must act now to do this.

Compare these statistics to the government's Project Merlin that set our five largest banks the task of lending money to businesses big and small. £190bn was the target of which £76bn would go to SMEs. The overall target was beaten by almost £25bn, but none of that excess went to SMEs. In fact, SMEs received £74.9bn, £1.1bn less than their target. As usual, access to finance favoured big business with the real job creators - the SMEs - getting the short-straw.

Business secretary Vince Cable believes the economic recovery is 'being imperilled' by a 'yawning mismatch' between demands for finance from small business and bank lending. And so say all of us! But hang on Mr Cable; surely you're in government and in a position to do something about it? Evidently not.

The Federation of Small Business (FSB) says that access to finance is a 'major barrier' to growth for than one in five small companies. Indeed, 41% of loan applicants were declined in the three months to February. Head of policy at the FSB, Graeme Fisher, says that 'our existing banking system is not geared up for lower-end loans of less than £25,000, there's no money in it.'

Now George Osborne is promising that his Credit Easing programme - announced in November - will go live before next week's budget. £20bn is available and all of it for SMEs. Hallelujah. After the failure of Project Merlin, Graeme Fisher is reserving judgement saying that 'implementation is all.' Let's hope they get it right because the theory is excellent - banks get hit if the business goes bust or fails to repay the loan but the government guarantee means banks will obtain the money at a very low interest rate, one they'll be expected to pass on to SMEs.

I hope the budget will include even more good news for SMEs; relaxed employment law, simplified tax reporting and reduced corporation tax to 15%. But a lighter touch on regulations can also backfire. So please Mr Cable, let's see an end to your plan to remove the need for independently audited accounts for tens of thousands of small businesses. You may reduce their workload but you'll also cut-off or limit their access to credit. You know it makes sense.

(ct)

In an environment where organisations only hire a small team of credit professionals, it is sometimes difficult to keep younger staff motivated. This important, albeit not unique challenge is particularly relevant to those leading credit functions.

Whilst speaking to a friend who works in the HR function of a growing business the other day, he mentioned the Employee Value Proposition (EVP) as a possible solution. Too often, organisations make the error of viewing their EVP as a strategy for building up their pipeline for external talent. The key to success, however, is to build a strategy that retains and develops existing talent and does not just focus on attracting new talent. This is also a more cost effective solution.

The EVP solution includes investing in training and development activities for staff. This will ensure that both senior and junior management feel like they are constantly updating their skills set. Peers can then share their knowledge and skills amongst each other. This will not only boost the performance of staff but also encourage them to work as a team which will not only improve the value of the credit function but the reputation of the department within the business as a whole.

Senior management should also help mentor new hires. This will keep them inspired about career progression and prevent a skills gap from developing. As the issue of talent management becomes increasingly important in the corporate agenda, it is important that all members of the team feel encouraged and inspired in their roles. If they think career progression is suspect, they are more likely to become demotivated and frustrated.

Investing in training and development skills for employees will allow businesses to attract and retain the best talent out there. Having the best people in the right positions will propel the organisation as a whole. People want to work for a company in which they can excel and progress.  Keeping people accredited will not only benefit your employees, but also improve the reputation of your business and ultimately, keep customers happy.

Businesses often have the misconception that training courses will be expensive and time consuming. However, development can often be achieved through a series of shorter one-day courses such as the ones Graydon runs http://bit.ly/zFuj48

A successfully performing credit function is crucial to a business. Strong in-house teams will then be able to maximise the benefit of partnering with a credit reference agency when interpreting data, identifying risks to credit and cash flow and to help find opportunities for growth.  Credit functions act to maximise business efficiency and will help improve prospects for growth.

(ws)

That punchy sound bite seems to be debated in the media and in the Commons on an almost daily basis, but what does it actually mean? If it means mud-slinging at bankers, people on benefits and generally anyone who's not 'us' then we're doing a very good job of it, but  I think it means something different.

Being 'in it together' means sticking together. It shouldn't mean company owners having to resort to pawning their assets. And if you want to know how we can stick together better, then Chinese business culture can teach us a lesson or two. Particularly the Chinese immigrant community in Spain. Not only are Chinese in Spain gainfully employed, but they are also becoming very successful.

Despite making up fewer than 3% of the immigrant population the Chinese account for 24% of foreign born entrepreneurs. And sticking together is the secret of their success. The cohesive communities support new arrivals by finding them work.  They also provide each other with further support by pooling their resources and creating informal lending groups.

With an easy way to borrow money, small businesses can be established and they can also expand and grow, creating more job opportunities as they do so. The trust within the community is admirable, but what's more important is that it's working.

We might just be able to learn from these small immigrant communities that can find success with informal lending and an altruistic approach.  UK company owners might not be able to call for support of a community network based on nationality but it's exciting to see the emergence of crowd sourcing as a route to funding new ventures as well as growing existing ones.

Despite the novelty of such an approach, the fundamentals of ensuring a business remains an attractive proposition for credit extension remain the same. Aspiring entrepreneurs need still to present the financial case for their venture in the best possible light, ensuring their accounting is transparent and timely, so that credit reference agencies can rely upon the most accurate possible data when making rating recommendations.

And therein lies yet another reason why attempts to legislate away the quality of data maintained at Companies House must be resisted at all costs. We're in this together after all.

(sjp/ws)