Introduction The major banks, and other financial institutions, in the United Kingdom and across the developed world are experiencing a shortage of funds. They are unwilling to lend money to each other, or, indeed, to anyone else, so there is less money for consumers to spend. This has resulted in falling sales figures for businesses in the United Kingdom, and elsewhere, during the past 12 months, and, recently, a 2.5% cut in VAT, as part of an aid package worth £20 billion, in total, provided by the British Government. Surviving the Credit Crunch Falling sales can induce an understandable, "knee jerk", reaction in some businesses, which turn to price cuts, and job losses, as means of combating recession. These measures may not, however, represent sound economic sense. Recession may cause an increase, rather than a decrease, in business costs, and businesses may need to increase prices accordingly. Furthermore, cutting prices during recession can, ultimately, devalue a business in the eyes of potential customers. Similar comments apply to job cuts, which may be absolutely necessary in certain circumstances, but should not be undertaken without due consideration. Key employees can use their strengths to help a business through a recession, or economic downturn, and are equally important when the economy finally recovers. Effective management of the supply chain, and the early identification of potential cash flow problems, can make all the difference between success and failure during times of economic hardship. As is often the case, "prevention is better than cure", and it may be possible to create positive cash flow by increasing "days payable", or, in other words, the average time taken for your business to pay its creditors, whilst reducing "days outstanding", or the average time taken to collect your receivables. Business Insurance Recent figures suggest that roughly 10% of small and medium-sized businesses are struggling to meet their running costs during the current economic downturn, and that 7% of such businesses are cutting back on business insurance to make ends meet. Certain forms of business insurance are, of course, compulsory, but skimping on other, recommended, forms of business insurance can prove false economy in the event of a claim. Professional indemnity, and public liability, insurance protect a business against legal liabilities to third parties for injury, loss or damage, while stock, and business interruption insurance should also be seriously considered.