Lincoln businesses face cash flow problems

Faced with limited sources of finance and payment delays, cash flow may be a problem for many businesses in Lincoln, a survey suggests.

The Local Economic Snapshot survey, conducted by the Lincoln Business School in September, received responses from 64 Lincoln businesses.

Only 13% of city firms feel the recession is over for their businesses, despite the UK overcoming the economic slump for three successive quarters.

Three quarters of Lincoln businesses say that trading conditions have not improved yet, while a majority of companies said they still have problems accessing finance.

Over two-thirds of Lincoln businesses say their customers are taking longer to pay than the pre-recession period, leading to cash flow problems, the survey suggests.

A minority of Lincoln businesses feel the recession is over for them.

Many Lincoln companies are engaged in public sector contracts, and 72% of businesses surveyed said the upcoming spending cuts will affect them negatively.

There are some signs of revival as well. Over half of firms said they are expanding their businesses activities, and 66% said they are attracting new customers.

Workforce sizes are still to fluctuate though, as 22% of the companies surveyed said they plan to recruit staff, while 14% are planning to downsize.

The Lincoln Business School, part of the University of Lincoln, carried the same survey on a total of 120 Lincolnshire businesses in July and September.

Compared with the July survey, at a county level, 5% more businesses say they feel the recession is over (12% versus 7%), but they are still a minority.

The upcoming Comprehensive Spending Review is expected to be a blow for many Lincoln companies.

Herman Kok, Chairman of the Lincolnshire and Rutland Employment and Skills Board, which commissioned the survey, said:

“These are obviously turbulent times for our economy.

“This report perfectly demonstrates again that our economy is unique and also highlights the importance of instantaneous feedback.”

David Carter, Director of Portland Tools in Lincoln, welcomed the monthly economic snapshot initiative and found it helpful:

“As a long-established Lincoln business that has recently changed location, a quick snapshot of our local businesses’ views is proving really helpful.”

If you would like to take part in the monthly survey, email Liz Price, Senior Research Fellow at Lincoln Business School.