As economic growth moderates to the low single digits but inflation stays stuck at nearly 5%, it's clear the Celtic Tiger is going into hibernation for a while.

The difficulty facing a lot of small companies and sole traders in today's changing economy is that they haven't seen the bad old days or experienced a recession . . . their mettle hasn't truly been tested . . . and as a result they are not armed with the necessary skills to identify problems at an early stage and to take proactive measures to correct costly mistakes.

What to do when you feel your business is on track for a train wreck? How do you get back on the right track in tougher times?

The key is to know when things are beginning to tighten, to watch out for the signs of danger around the bend. According to David Gleeson, corporate recovery partner at accountants Russell Brennan Keane, any of these indicators could spell trouble ahead.

1) Cash receipts slowing down 2)Debtors days increasing 3)Customers squeezing more credit 4)A drop in sales 5)Costs continuing to increase due to inflationary pressures 6)A fall in the value of exports 7)A weakening dollar and sterling But recognising a problem and solving it are two different things. Once you've identified the danger, how can you avoid it?

"I've recently worked with a manufacturing company who have managed to avoid a potential train wreck by restructuring their finance and tightening up on credit terms to customers, " said Gleeson. "In real terms they sought a payment up front for the purchase of raw material, a further payment on account when product was delivered to site, and getting the clients to adhere to the 30 day credit for the balance. This has made a significant difference to get cash back into the business a lot quicker and has reduced their bad debt exposure."

"Cash is king" is the mantra of the small business owner . . . as well as their bankers and accountants.

Damian Young, small business banking manager at Bank of Ireland, said he's been repeating it to his customers at regional seminars aimed at preparing business owners for the changing economic environment.

"During the boom the focus was more on sales and maybe less on financial management. We're saying now 'get the balance right', " he said. "When cashflow is difficult, help the bank understand . . . don't wait until the last minute. Strong cash discipline leads to good results."

Young said banks were open to financial workouts . . . including invoice finance where they help manage a business's debtors . . . as long as customers kept the lines of communication open. Without constant contact, a banker can't make the kind of decisions that can help save a floundering enterprise. He said he always preferred to come to an arrangement that allowed the business to continue, but in extreme cases the bank could seize assets.

Young's three principles for small businesses . . . manage debtors, don't hold excess stock, don't do more work than you can sell . . . echo Gleeson's four point plan:

1) Manage cash and debtors to ensure that you don't become a banker for your customer.

2) Look at alternative sources and options for funding such as factoring debtors and attractive terms for cash payments.

3) Grow sales by looking at new markets and products but don't be a busy fool, make sure the sales are profitable.

4) Look at your business to see where there are inefficiencies and excess overheads, where can this waste be eliminated.

Isme chief executive Mark Fielding was on the side of the banker and accountant when it came to cash: "Anything that can be turned into cash should be, " he said.

"Manage your business as if it were all doom and gloom, " he said. "Normal principles and practices don't change, but some may have slipped into bad habits during the good times.

"The credit squeeze is starting, " he warned.

"And banks only give out umbrellas when it's fine."

Still, he advises members to "go straight to your banker whether it's good news or bad . . .

and to your accountant to prepare for contingencies. We may be far from a crisis, he said, but it's the right time for retrenchment.

"I can't over emphasise the importance of planning the development of the business at the outset of the financial year for profitability and control of overheads, " said RBK's Gleeson. "Today's savvy business owner must plan the strategy of the business for the coming year and for successive years to ensure that you have a roadmap."

So who do you keep close to your business? "Your banker and your accountant."

Naturally.