Managing Your Cash Flow

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Businesses confident about surviving recession

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However, a majority of businesses polled by the Chartered Institute of Management Accountants also admitted they’ve experienced a decrease of more than 10 per cent in either company turnover, net profits or sales turnover during the past year.

This pressure is further magnified by an increase (1 to 5 per cent) in overhead costs, supplier prices or basic salary packages for a third of mid size organisations.

Future challenges the respondents believe will hit them hardest include customer demand (72 per cent), receiving prompt payments (72 per cent) and the ability to expand in to new markets (67 per cent).

In another sign small business is losing faith in the governemnt, only 11 per cent of respondnets said they had confidence in Labour. Eighty-three per cent said that the recent 2.5 per cent VAT reducation hasn’t affected them or helped their business.

Meanwhile, three-quarters of mid-size companies say they expect good cash flow management, as they don’t expect any changes in creditor days, debtor days and stock days in the next quarter.

CIMA director of brand Ray Perry notes: “Although the mid-size market is weathering the storm and remaining upbeat, it is clear that it is caught in an economic vicious circle. Respondents want to move in to new markets and ramp up company and sales turnover. Yet, despite optimistic cash flow trends, ongoing decreases in areas like headcount and net profits are making it difficult for these companies to drive things forward at the speed they would like to.”

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