Summary
The results of this survey support the view that the current economic situation is more than ‘just' a credit problem. Large numbers of businesses are seeing falls in their sales/revenue. Businesses are increasing the time taken to pay debts with other businesses. Almost 30% of all businesses reported that they were waiting on average over 60 days to be paid by debtors. This may be due to the debtor businesses themselves having cash-flow difficulties (either due to reduced income, problems with access to finance or their own debtors delaying payments). The implications of so many businesses' balance sheets of waiting more than two months for their debts to be paid could be serious and have an impact on the demand for credit going forward.
The results of the survey suggest that businesses are increasing their existing lines of credit such as overdrafts (and indeed delaying payment of debts to other businesses) rather than seeking or receiving credit to invest in the longer term future of their businesses.
Another significant feature of the results is the responses from larger businesses. They appeared to be finding it more difficult to raise finance relative to the previous year, compared to small and medium-sized businesses. They were more likely to have reduced their employment and business expenditure in the last three months. They were also the most pessimistic about the future in terms of employment.
The Ministry of Economic Development intends to repeat this survey towards the end of May 2009.
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