February 9, 2006
Trade Finance: 
Small firms concerned about oil price affect on cash flow
One in ten small businesses in the UK are concerned about the rising price of oil and how it will affect costs and cash flows in their business.
Natural disasters, oil monopolies, and the wars in Afghanistan and Iraq have left small companies concerned especially in the transport and communications industries, according to a survey by GfK NOP.
Over 90 per cent of managing directors and financial directors in these industries expressed concern and 89 per cent of those in the agriculture, mining and fishing sectors were also worried about high prices and supply instability.
Trevor Ellis, managing director of hauliers CS Ellis, said: "The second half of 2005 saw some significant rises in oil prices and for a company like ours the cost has to come straight off the bottom line.
"We are protected by clauses in our client contracts which allow us to increase some of our charges if oil prices increase, but I know of a number of companies that don't have similar protection and the effect of the latest hikes could well be fatal."
Andy Raynor, chief executive of the Tenon Forum, which commissioned the survey added that large oil price rises can cause massive cash flow problems, and often transport, communications and agriculture businesses are particularly susceptible to cash crises.
There are several ways that small companies can raise cash at times of need including invoice factoring, business loans.
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