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Small businesses should protect themselves against the effects of the credit crunch, according to a private business advisory body.

The Forum of Private Business (FPB) is giving small business advice suggesting SMEs are prepared for job losses, possible action from employees and delays in payment from larger customers.

A KPMG business confidence survey found that up to 53 per cent of firms are planning to reduce staff levels, while a further study revealed that 49 per cent of larger companies, with revenues over £250 million, intend to negotiate longer supplier payment terms with smaller suppliers.

KPMG advisors say companies need to focus on gaining control of their cash and to work smarter across the supply chain to create opportunities that reduce the cash cycle for all participants.

The FPB's senior member services representative Philip Moody advises business owners to arm themselves with expert advice and insure themselves against the cost of claims from employees.

Mr Moody says: 'Recent figures have shown a huge rise in the number of tribunal claims. As redundancy is a major factor fuelling tribunal claims, this is likely to continue given the figures from KPMG, which indicate the likelihood that a lot more people will be made redundant in the coming months.'

In other news, a Confederation of British Industry survey has revealed that high street retailers are experiencing the worst slump in sales in 25 years, with over 60 per cent of respondents saying sales were down in the first half of July.

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