UK finance directors are considering drastic cost-cutting measures to shield
themselves against the effects of the credit crunch.
Nearly half of the small companies that represent the bedrock of British
business are also beefing up their risk management profiles, according to Baker
The mid-tier firm canvassed the opinion of FDs at companies with turnovers
between £20m and £250m and found that finance functions were preparing for a
significant period of belt tightening.
The review found the number of companies looking at cutting costs has surged
from 26% in February to 45% at the beginning of April.
One-third of FDs said the credit crunch was beginning to impact more on their
business, with 60% saying they were experiencing a decrease in their profits.
One-quarter were now finding it harder to secure financing as lenders were
taking a more cautious approach.
Businesses also believe the likelihood of their suppliers collapsing had also
increased. In the first survey, only 18% thought that 5% or more of their
suppliers were in danger of going bankrupt, but this has shot up to almost 40%
Companies are now looking at tougher credit controls allied with other more
drastic measures, Baker Tilly said.
While 15% were considering redundancies, one in 10 had mooted a change to
their remuneration policies and one-quarter are thinking about scaling down the
number of new recruits.
Mark Harwood, a partner at Baker Tilly specialising in advising companies,
said: ‘Risk management is becoming ever more important as the effects of the
credit crunch begin to impact on all areas of business. We are in a period of
uncertainty and companies are focusing on internal controls and assessing
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
The Financial Reporting Council has issued guidance regarding the annual reporting of 1,200 large and smaller listed companies. The letter highlighted the key issues and improvements that can be made in the 2016 reporting season
Baldwins Accountancy Group has continued investment in the north-east and appointed David Fish as a director in its corporate finance team