How to face the credit crisis in 2009

"The Government must and can keep small firms uppermost on its agenda as it negotiates the economy through difficult and choppy waters" is the main focus of the FSB's (Federation of Small Businesses) New Year's message. The FSB, UK's largest campaigning pressure group that looks after the interests of self employed and owners of small firms, released their new year message calling for a light legislative programme for 2009 and a budget focused on "getting the economy running again".

"Everyone has a role to play" says John Wright, Chairman of the FSB, in regards to making the recession shallow and short rather than deep and long. He also points out that small businesses will be focal players in getting the UK economy out of the recession and into recovery as they represent 51% of the private sector's turnover. John Wright praises small businesses as being "innovative, enterprising and flexible" and "engines for growth and job creation" and therefore states that consumers and government departments alike should be encouraged to "Keep Trade Local".

Preparation is of key importance, according to the FSB's New Year message, which encourages bank managers without experience in situations such as the nation's economical recession to be given training to help protect the 10,500 bank branches around the UK from having to unnecessarily close their businesses. Other measures requested by the FSB include an extension of the Small Business Finance scheme, access to working capitals to help with cash flow and guaranteed overdraft facilities. With creditor's criteria tightening, maintaining a good level in cash flow will be important to avoid falling behind on business credit card payments and damaging the company's credit.

Businesses are also being urged to sign the "Prompt Payment Code", a set of guidelines and rules designed to help small firms and suppliers survive the crisis in the year to come. Signatories will be expected to enforce the payment of invoices on time, uphold contractual agreements and avoid changes in payment terms without reasonable grounds, they will also be expected to provide clear guidance on payment procedures and the implementation of systems to deal with complains and disputes and, above all, maintain good practices and request suppliers to implement the code down their own supply chains.

The FSB indicates that entrepreneurs use both personal and business credit cards to finance their company and that, with base rates at 2 percent and dropping, it's important for the government to put a cap on interests charged on credit cards. With this in mind, 2009 will see companies having to be more careful about keeping up with their business credit card balance payments and there is expected to be a shift in credit cards at the beginning of the year as 0 percent balance transfer and low apr business credit cards offers are used to reduce monthly costs in preparation for the new year's challenges.