British firms face cash-flow crisis.

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The credit crunch is hitting UK companies much harder than those based in the US. A greater proportion of British firms face delayed payments, reduced access to credit, increased financing costs and demands for early payments from suppliers, according to a survey by KPMG.

The survey asked 342 companies how the credit crisis was affecting the way they managed working capital. When asked how they planned to address cash-flow problems, 49 per cent said that they planned to negotiate longer supplier payment terms, while 46 per cent said they would tighten credit lines.

"Squeezing suppliers and delaying payments is a game with few winners," warned Andrew Ashby, director at KPMG Advisory. "Firms need to focus on controlling cash and working across the supply chain to reduce the cash cycle for all."

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Increased pressure from stakeholders was seen as the greatest effect of the credit crunch: 76 per cent of UK respondents said its impact was high...

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