Baal-zebub
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Joined: 01 Jan 1970
Posts: 124
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 Posted: Fri May 19, 2006 8:11 pm Post subject: Fed Raises Interest Rates: The Impact for Small Business |
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<p>The goal of the Federal Reserve is to minimize inflation by moving the interest rate. </p>
<p>The goal of small business is to maximize cash flow by moving receivables. </p>
<p>The interest rate trend is important. Jeannine Aversa, from <em>The Associated Press</em>, writes in <em>The Washington Post</em>, <a href="http://www.washingtonpost.com/wp-dyn/content/article/2006/05/11/AR2006051100164.html">Fed Raises Interest Rates to 5-Year High</a>,</p>
<blockquote>The Fed's latest action pushed up the federal funds rate, which is the interest that banks charge each other on overnight loans, to 5 percent. It marked the 16th consecutive quarter-point increase in the past two years.
<p>In response, commercial banks raised their prime lending rate by a corresponding amount, to 8 percent, for certain credit cards, home equity lines of credit and other loans.</p>
<p>Both the funds rate and the prime rate are at their highest points in just over five years.</blockquote></p>
<p>Does the small bump in interest rates directly affect the small business owner?</p>
<p>Directly, a bit.</p>
<p>Indirectly, perhaps a bit more.</p>
<p>It is my unfortunate experience that some vendors will use any excuse to delay payment. Or want to negotiate terms. Using any, any excuse.</p>
<p>Small business owners: watch your outstanding accounts receivable. Don't let the troubling news of interest rate hikes trouble your cash flow.</p>
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