Skip to main content
Facilitate Magazine: Informing Workplace and Facilities Management Professionals - return to the homepage Facilitate magazine logo
  • Search
  • Visit Facilitate Magazine on Facebook
  • Visit Facilitate Magazine on LinkedIn
  • Visit @Facilitate_Mag on Twitter
Visit the website of the Institute of Workplace and Facilities Management Logo of the Institute of Workplace and Facilities Management

Main navigation

  • Home
  • News
    • Comment
    • People
    • Reports
    • Research
  • Features
    • Analysis
    • Features
    • Round Tables
    • Webinars
  • Outsourcing
    • Contracts
    • FM Business Models
    • Interviews
    • Mergers & Acquisitions
    • Opinion
    • Procurement
    • Trends
  • Know-How
    • Explainers
    • Legal Updates
    • White Papers
  • Jobs
  • Topics
    • Workplace Services
      • Hospitality
      • Catering
      • Cleaning
      • Front of House
      • Grounds Maintenance
      • Helpdesk
      • Mailroom
      • Manned Guarding / Security
      • Pest Control
      • Washroom Services
      • Disaster Recovery
      • Specialist Services
    • Professional Performance
      • Behavioural Change
      • Continual Professional Development
      • Education
      • Management
      • Recruitment
      • Training
    • Workplace Performance
      • Benchmarking
      • Health & Wellbeing
      • Operational Readiness
      • Procurement
      • Security
      • Workplace User Experience
      • Workplace Culture
    • Compliance
      • Health & Safety
      • Risk & Business Continuity
      • Standards
      • Statutory Compliance
    • Building Services
      • Architecture & Construction
      • Asset Management
      • Building Controls
      • Building Fabric
      • Drinking Water
      • Fire Protection
      • HVAC
      • Landscaping
      • Mechanical & Electrical
      • Building Security
      • Water, Drainage & Plumbing
    • Technology
      • Building Information Modelling
      • CAFM
      • Data & Networks
      • Document Management
      • Information Management
      • Internet of Things (IoT)
      • Software & Systems
    • Energy management
      • Energy Management Systems
      • Electricity
      • Gas
      • Solar
      • Wind
    • Sustainability
      • Environmental Quality
      • Social Value
      • Waste Management
      • Recycling
    • Workspace Design
      • Agile Working
      • Fit-Out & Refurbishment
      • Inclusive Access
      • Lighting
      • Office Interiors
      • Signage
      • Space Planning
      • Storage
      • Vehicle Management / Parking
      • Washroom
    • Sectors
      • Corporate Office
      • Education
      • Healthcare
      • Manufacturing
      • International
      • Retail
      • Sports & Leisure
      • Regions
  • Buyers' Guide
Quick links:
  • Home
  • Topics
News
Content
Market Analysis
Topics
News
Content
Market Analysis

Banks' reluctance to lend could spell failure for many smaller suppliers

Open-access content 11th December 2008
 

By Graeme Davies

18 December 2008

Despite the Bank of England's recent reduction of headline interest rates by another 1 per cent to a historically low 2 per cent and expectations that this could fall even further in the early months of 2009, banks remain very reluctant to lend to each other and hence to their business customers. This reluctance, at the very top of the lending tree, is creating increasing tension lower down in the business world, putting particular strain on smaller companies which struggle to adapt to lengthening payment terms from their larger customers.

Official figures show that the premium banks charge to lend to their rivals is the highest for several years and this feeds into a continued reluctance to lend to corporate clients. So huge government funding pumped into the banking system has not greased the wheels of the lending system yet, and if banks remain highly reluctant to even lend to each other, then they are even less likely to be keen to lend to corporate clients. This lack of credit is freezing the whole business system and the pressure is showing most sharply at the lower end of the market as larger companies are squeezing their smaller suppliers by stretching payment terms. Business insolvencies are soaring, with failures expected to rise by 50 per cent next year and then peak in 2010.

The increasing desperation of smaller companies is illustrated by the growing number of firms resorting to legal action to try to extract payment from their customers. FM firms are no strangers to this phenomenon with research by the Credit Management Research Centre at Leeds University showing a big increase in the number of business services companies resorting to legal action to get payment.

This is an extremely worrying portent for all sectors of the UK economy, apart from, possibly, the business recovery and insolvency industry, and the FM sector is likely to see its fair share of business failures too. For a sector with a significant exposure to struggling property and financial operators, the risks are all too clear, and companies with weak balance sheets showing significant debt are going to find themselves under the most pressure as they struggle to service their own debt due to growing cash-flow pressures.

For the whole FM sector, the potential fall-out could be worrying. As more companies fail, the sector will shrink and the necessary competition required to keep prices reasonable and the services satisfactory, in the process maintaining value for money for the clients, could disappear. The sector risks seeing the diversification at its lower end diluted as businesses either go bust or are swallowed up by larger operators or better-funded peers. There will be some clear winners in the long run, and some of the better-run smaller FM operators will emerge to become the sector leaders in future years.

Throughout the first half of 2009, at least, there is likely to be a good deal of pain endured at all levels, but most acutely at the smaller end of the scale.

Graeme Davies writes for Investors Chronicle
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Most-Popular

 

Latest Jobs

Property Programme Manager - Fire Safety – Student Accommodation (MC)

London (Central)
£100k plus bonus + package
Reference
54310

Interim Head of Health & Safety

London (Central)
£300 per day (PAYE)
Reference
54307

Engineering Manager

Staffordshire
£60,000 + car +bens
Reference
54209
See all jobs »

 

 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to print

Sign up to receive our weekly Redactive News e-newsletter.

Subscribe
Facilitate magazine cover, June 2020
​
FOLLOW US
@Facilitate_Mag
Facilitate Magazine
Facilitate Magazine
CONTACT US
Contact us
Tel: 020 7880 6200
​

IWFM

About IWFM
Become a member
Qualifications
Events

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to Facilitate Magazine
Write for Facilitate Magazine

General

IWFM Jobs
Help

www.facilitatemagazine.com and Facilitate magazine are published by Redactive Media Group. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive, Level 5, 78 Chamber Street, London, E1 8BL