While the full effect of the credit crunch has yet to be seen, almost two-thirds of finance execs were forced to make strategy changes because of a shortage of short-term credit.
The availability of short-term credit has tightened up significantly over the last month. And companies of all sizes are being forced to get creative and think fast.
Approximately two-thirds of businesses have taken at least one step to deal with tighter borrowing standards according to an Association for Financial Professionals survey.
What steps are companies taking?
- 41% are moving short-term investments to U.S. Treasuries or banks.
- 37% are cutting back on capital spending, and
- 29% are shortening the life of their investment portfolios.
In addition, 25% of respondents have made reductions to their credit lines during the crisis.
And, according to the study, even more companies will be forced to take action if the short-term credit problem doesn’t get better by year-end including:
- 61% who will lower their capital spending
- 42% who will hold or reduce hiring, and
- 27% who will make trading partners’ credit standards more stringent.
The survey was taken from 366 treasurers and CFOs.