With about 40% of the bigger UK companies finding it harder than ever to get finance and credit, nearly a third of their chief financial officers are therefore holding onto cash.

New research by specialists in interim accounting and finance recruitment, Robert Half Management Resources**, shows that 26% of all those surveyed said that they had not returned profit to investors or re-invested in the business due to difficulty in securing finance and credit.

But the surprising thing is that over a third (35%) of the larger companies asked said that they were retaining cash because of the problems in getting credit and finance.

But some firms are looking to expand and saving the cash to do so is seen as the way ahead for 16% of firms. 8% of all firms asked were planning to use the saved cash for mergers & acquisitions as a way to grow. Amongst the larger firms this proportion grows to 15%.

Director of Robert Half Management Resources (UK), Ashley Whipman, said “It is not surprising to see that CFOs are reserving cash during this period of uncertainty. UK businesses are still finding it difficult to secure finance and credit to help support business growth, which is adding further pressure on the UK economy. Although it is encouraging to see that many CFOs plan to grow either organically or through acquisition.”

When asked ‘Which of the following best explains your reason for keeping higher cash reserves?’ their responses were as follows:

Total Scotland / N England Midlands S England London
Difficulty securing finance and credit so we are keeping more cash in reserve

26%

36%

35%

25%

11%

Concerns over economic outlook

23%

36%

18%

33%

11%

Increase in operational cash flow disruption therefore need to keep more cash in reserve

21%

7%

18%

33%

26%

Stockpiling cash for investment in the business to expand

16%

14%

12%

8%

26%

Stockpiling cash for acquisition

8%

7%

6%

Not quoted

16%

Source: Robert Half International, September 2011

Cash flow is clearly a concern for many CFOs and with four in 10 companies planning to increase investments in the next 12 months, it is essential that companies have a clear financial strategy to maximise returns during this era of uncertainty. Many companies without the requisite talent to manage strategic initiatives in-house are turning to senior-level finance professionals on an interim basis to provide financial guidance and leadership.” Ashley Whipman concluded.

I would put in a very old fashioned way. Companies as well as people are being forced to live, plan and grow within their means. Leverage for is no longer the quick route to riches that it once was – the concepts of hard work, perseverance and sound financial planning are making a come-back.

**‘Each year Robert Half commissions a survey of 200 UK CFOs on the business priorities and concerns facing their businesses for the following year. The results are compiled in a white paper, Strategic Priorities for UK Businesses, An independent report on the issues affecting today’s CFOs. The survey is conducted by an independent research firm and to be statistically representative, results are stratified by geographic region, company size and company type. Readers can download a copy of the report at www.roberthalf.co.uk.’

Comment Here!

comments