From the FD’s mouth: Property is a demanding and challenging sector, particularly post-Brexit

(4) Is there anything important that an FD looking to get into the construction and property space needs to know about the current market

Currently an FD needs to be aware that post-Brexit the property market is very uncertain. Developers, investors, construction companies are all trying to judge in which direction the market is heading. Valuations are in flux and the level of future investment flows are hard to predict.

So important would be re-assessing inputs into financial models, reviewing funding arrangements in case any of the funding partners, such as banks or other financial institutions are considering varying their terms or the type of projects they would back, stress testing financial arrangements for moves in interest rates and other financial variables. On the construction side, controlling costs and, in particular, with the drop in Sterling, assessing any forex risk on such factors as raw materials and other imported goods costs necessary to a development project.

(5) What would you say are the growing challenges to different businesses units

Following Brexit, there have been significant challenges within the commercial property market, with uncertainty holding back deals and investment. To address this challenge, we have to ensure that we keep a close eye on valuations, pitch for the right developments, monitor costs sharply and not over reach ourselves in terms of returns expected.

The challenges to expanding in the public/private sector partnership arena revolve around ensuring our modelling is right, making sure our payment and repayment schedules are being adhered to, monitoring liquidity ratios on our various projects. Also with new PFI2 model being mooted, we will have to ensure that we can adapt our offer to match any new formula for these projects.

(6) What is the best way to manage cash flow how do you make it sustainable

The best way to manage cash flow is through precise cash flow forecasting. Its an important skill to get right early on because thats what keeps the company running thats particularly true for small or early-stage companies.

The best way to manage cash flow also depends on the industry. In the service industry, it means timely billing and ensuring collection before you have to pay out. With public and private partnership projects, contractual payments can be delayed and it’s vital to build reserves into projects to withstand these issues. Its also a question of timing with PPP projects, we can be working on a 30-35 year timeframe and this is where accurate cash flow forecasting is key.

(7) How are you currently ensuring the growth of the company

As FD it is important I engage with our senior management team to help chart and develop a strategy for growth that maximises our opportunities in the market based on the current landscape across both the public and private sector property arenas. By providing input from an FDs perspective I can help judge whether we can fund and support the strategy that is being developed as well as asses the varying levels of risk that are entailed by the strategic options we are considering.

I am also in constant dialogue with the operational heads across the company, to be aware of the financial needs of current projects as well as potential projects in the pipeline to make sure we have the funding and financial capability in place to deliver them.

Elsewhere, with its innovative business model, Cogress enables its community of qualified users to invest in 10m+ properties with as little as 20,000 so we talked with CFO Paul Israel to gain a better understanding of the real estate sector and his role within the company.

Share this story

Close
Menu
Send this to a friend