Category Archives: Economy – International

Observations about the state of international economy from the financial experts at IFG Network

What If?

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A  number of small businesses believe they do not have enough cash reserves to survive another economic downturn, a study by Forbes Insights in association with ACCS (the Association of Chartered Certified Accountants), Certified General Accountants Association of Canada (CGA-Canada) andCNDCEC, the professional body for certified accountants in Italy, has found. While this study did not include the US, other surveys of US small businesses have indicated similar results.

The study was based on a survey of more than 1,750 small and medium sized enterprises (SMEs) in Canada, China, Italy, Singapore, South Africa, and the UK, with 30% of the sample micro businesses employing fewer than 10 people.

It shows that while most SMEs believed the worst of the recession had past, there was an unexpectedly high number of businesses – between 31% and 54% in each country, including those which have seen high growth and were less affected by the global downturn, who felt they did not have adequate cash reserves to survive another financial crisis

Invoice factoring can help provide a solution to cash flow problems. It is a fast and efficient means of obtaining cash when needed for growth or to cover operational costs. If there is another downturn small businesses have an affordable option.

Jan J. Cunningham

The Interface Financial Group

Small Business Confidence Improving in Several Struggling Economies

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Small business confidence shows improvement in many countries whose economies have been battered over the past three years. In the US, the October 2010 Discover Card Survey of small business reports “Small business economic confidence rebounded in October as more small business owners report economic conditions for their business and for the country are getting better. The monthly index rose to 84.2 in October, up 10.4 points from 73.8 in September – the biggest one month gain since April”.

A recent UK survey shows a similar trend in confidence levels reporting, “ small business confidence has increased over the past six months, with 76% of small businesses describing their current outlook as either stabilising or brighter compared with just 58% six months ago”. Ireland is also showing some signs of an improving economy.

The Australia CPA Survey shows “small businesses in the Asia-Pacific region believe their economies have emerged from the global slump and expect growth patterns to increase”. Small businesses in New Zealand, Australia and Singapore are all indicating improved confidence in the local economies and in the region.

All of this is good news! As economies improve, small businesses will have more opportunity and may begin to see some real growth in 2011. As businesses begin to grow, there will be a need for capital to support the growth cycle. Small businesses can obtain cash quickly through a invoice factoring service that will purchase select invoices providing cash on a “use it as you need it” basis providing businesses with needed capital to support growth. Whether in Canada, US, Ireland, UK, New Zealand, Singapore or Australia, companies have access to cash when required without having to go to the bank.

Jan J. Cunningham

The Interface Financial Group

Small Business Confidence Improving

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A recent Bloomberg report states, “Confidence among U.S. small businesses rose in August for the first time in three months as the outlook for sales and economic growth turned less gloomy, a private survey found.

The National Federation of Independent Business’s (NFIB) optimism index increased to 88.8 from July’s 88.1 reading. Four of the index’s 10 components rose and one was unchanged. The measure averaged 100.6 in the five years before the economic slump began in December 2007.

While expectations for the economy and sales improved, both measures were still in “recession territory,” the report said, which explains why the outlook for hiring and capital spending at small companies weakened last month. More jobs and increases in consumer spending are needed to bolster the recovery.” The August survey reported job loss averaging 0.3 employees per firm. The survey has reported job losses in 10 of the last 12 months.

Other recent surveys indicate that financials of small businesses are stabilizing. This is important as it is a prelude to growth which is expected to be slow through the remainder of this year and into the beginning of 2011 and that 50% of survey respondents indicate that they will go to the bank for credit when required. There may be a surprise considering the banks are not lending much to small businesses due to increased requirements although, many banks indicated that there is money to lend providing the financial statements are strong enough.

For those businesses whose financials may not meet the banks requirements, invoice factoring can provide cash for operations and to support growth until the financials will support traditional lending.

Jan J. Cunningham

The Interface Financial Group

 

California Small Business Survey

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Last year, we reported some of the results of the 2009 California Small Business Survey. This information is provided as California is often a microcosm of trends in the US. The 2010 survey recently released shows disturbingly little change from the prior year survey.

  • 85% of respondents stated that California is headed in the wrong direction
  • Business climate for small businesses – 83% stated Poor to Very Poor compared to 81% in 2009
  • When asked about the number of people employed – 43% say the number decreased over the year compared with 44% last year
  • 76% state that there are no plans to hire over the next six months
  • 48% state that to control or reduce costs they are reducing number of employees and hours and 76% state that they are delaying purchases or other expenditures
  • 64% state that access to capital is one of there highest priorities compared with 57% in 2009

Access to capital is a problem for most small businesses across the country but there is a viable alternative funding source called invoice factoring which can provide cash quickly and easily to qualified businesses. This is a “use it as you need it service” that can help businesses survive and begin to grow as the economy improves.

Jan J. Cunningham

The Interface Financial Group