· 1 min read · Features

Cash-flow is king in tough times

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The recruitment industry will hope the Chancellor’s 'pro-growth, pro-jobs' Budget does what it says on the tin: helping businesses and boosting the wider economy both now and in the longer term.

For instance, the extension of the small business rate relief holiday by one year to October 2012 should help to ease financial pressures among small firms now, allowing for potential future expansion.

With youth unemployment reaching an all-time high in the three months to November 2010, the highest level since current records began in 1992, the sector can certainly take heart from several of George Osborne's measures designed to support people into work, such as the creation of 40,000 new apprenticeships and 100,000 work experience places over the next year.

Skill shortages among our workforce remain a major concern for many businesses and the economy as a whole, so the chancellor's decision to extend funding for 24 new university technical colleges for vocational training is a step in the right direction - towards a well-qualified set of graduates able to take advantage of increased employment opportunities as the job market starts to pick up. Despite some encouraging measures, the reality is that the country is still in difficult economic times. With inflation set to remain between 4% and 5% this year, and growth forecasts set to be lower than original predictions, there are still challenges ahead for the recruitment sector. Maintaining a healthy cash-flow will remain a key challenge for recruitment businesses in 2011.

Firms therefore need to identify now where cash is tied up to spot potential bottlenecks and act to reduce their impact. By doing so, they can reduce the burden of cash-flow problems and make the road towards recovery easier at the time they need it most.

Edward Winterton (pictured), recruitment finance specialist at Bibby Financial Services