Finance directors need to retain control of the corporate agenda in the
coming months and run their business on a cash basis to avoid falling victim to
a liquidity trap, Tesco’s Andrew Higginson told today’s Financial Director
Summit in Hampshire.
Higginson warned the UK was only at the beginning of the slowdown, with the
problems that have ‘messed up’ banks yet to impact fully on the wider economy.
‘We are almost certainly in recession at the moment and all the consequences of
that are yet to play out,’ he said.
Higginson, recently promoted to chief executive of retailing services but
continuing in the FD role until a replacement is found, urged delegates to
manage their businesses within their means.
‘If you haven’t got liquidity you are going to find it hard to get at the
moment,’ he said. ‘Keeping control of the agenda, avoiding the tender loving
care department of the banks, avoiding “Something Must Be Done” syndrome is
really at the forefront of what you should be doing at the moment and in the
coming weeks and months.’
He warned ‘cash could kill’, with too many businesses ‘sleepwalking’ to their
collapse by focusing on earnings instead.
At the same time he said it was essential businesses continued to invest and
not assume growth was impossible despite torrid market conditions. Despite tight
credit markets, in May Tesco purchaseed a South Korean hypermarket chain in May
for nearly £1bn – the supermarket’s biggest-ever deal.
And he said FDs should manage carefully their relationships – and make their
company important in the eyes of their bankers.
‘It’s better to owe a lot of money to a few banks,’ he said, rather than a
little to many.
Cowgill Holloway and Warings Business Advisors have merged, with a range of growth plans in the North West put in place
MHA MacIntyre Hudson has partnered with cloud accounting software provider Xero ahead of the government’s requirement for digital records
Smaller businesses could be excluded from government plans for making business transactions digital, found new research from ICAEW
Further powers are being sought by HMRC, but it is ‘failing’ to use those it already has, such as Conduct Notices, says RPC