UK PLC should take assertive action in coping with the spending cuts announced today, says Bruce Mackay, partner at Baker Tilly Recovery and Restructuring LLP:
“Few UK businesses will escape the ripple effect of the announced cuts to public sector spending. Taking £billions of spending out of the UK economy will have direct and indirect effects throughout the supply chain – from the top down to the consumer and back up again. Those who anticipate and act quickly to address the implications of the cuts are likely to be the fittest in the battle for survival and longer term prosperity.
“According to joint Baker Tilly/Company Watch research on the latest accounts filed by 22,164 UK companies in the turnover bracket £10-100m, 24% experienced a fall in sales of 10% or more ahead of the cuts. Therefore, the public spending squeeze will add further pressure to an already tight market and it will be suppliers down the chain that will bear the brunt.”
‘Take Action’
“This is the time to take action. A proactive attitude is the key and there are a number of essential steps to take with any business in distress to maintain stability. Fully assess and review your cash flow and keep a close eye on your credit. Monitor the impact of the cuts on your own key suppliers. Be firm with your own customer base, do not continue to supply without payment as agreed as this could increase your exposure.”
Credit Worries?
“Talk to your funders; work out a survival and stabilisation plan if necessary. Be clear about where you might need additional funding and what security can be provided.
“Natural inclination may be to brace for the worst. Remember that your competitors will face a similar position and not all will be able to weather the storm. If you are able to withstand the initial impact to your business, the competitor fallout could present further opportunities in the market.”
Speed is of the Essence
“Surprisingly, many businesses have not conducted a business review prior to the cuts, instead have adopted a ‘wait and see’ approach. This will not protect you, we recommend you seek advice and take action where you can. Distress can spread quickly so do not delay.”
Ciara O’Shea, Baker Tilly PR, 020 7002 8600
Melanie Shelley, Broadgate Mainland, 0207 776 0520
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