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The effect of the Global Credit Crunch on Recruitment agencies intensifies.

"Continuing turmoil in global financial markets has led to a tightening of credit conditions, particularly for the most risky borrowers," He also noted that surveys are suggesting that the economy was starting to slow. Anatole Kaletsky, one of the country's leading economic commentators and Associate Editor of The Times this week wrote "The British economy is moving into a serious slowdown. Meanwhile, the British banking system is on the verge of collapse, with total catastrophe only avoided by the biggest financial support operation ever offered to any private company by any government anywhere in the world."

In addition the continuing bite from this summers credit crunch has led some analysists to suggest the equivalent impact on lending of a 0.75% interest rate rise. The Bank's monetary policy committee said that consumer spending was slowing and credit conditions were tightening for both businesses and households - with mortgage approvals down to their lowest for three years. These factors are far outweighing its worries on inflation.

Given the uncertainty of the current financial climate, can banks provide Recruitment Agencies with the peace of mind and best deals they require?

The credit crunch has led to Banks applying a tighter grip, reducing borrowing across the board and requiring higher levels of security than in previous years. Inevitably, this will lead to some borrowers looking elsewhere to enhance their cash flow. Funding through loans and overdraft facilities alone may not deliver the level of service and flexibility Recruitment Agencies need. One alternative to overdrafts and loans is factoring which isn't linked to personal or fixed business assets, but supported by the security tied up in unpaid sales ledger invoices.

"The apocalyptic rhetoric and doom-mongering of some analysts might be a little premature and no one should be pushing the panic button just yet". Says Aziz Mhar, Managing Director of the LBS Group. "However, it would be at the least diligent for Managing and Financial Directors to examine what’s on offer from other institutions that are able to react more swiftly to changes in the market. For instance, we have created 'Fixed-Fee Factoring' which offers Recruitment Agencies a 0% APR Discount rate for twelve months, essencially aleviating any fears for at least another year in much the same way a fixed rate mortgage will see a homeowner through any short term uncertainty. To my knowledge no bank can offer that ". He added.

With growth levels reduced and the effects of the US sub-prime crisis still developing Recruitment Companies should start shopping around for the best finance deal possible this Christmas.

For more information on FinanceLogix factoring products contact Robert Lowe on 0161 838 5698 or visit www.financelogix.co.uk

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