Finance directors prepare for another tough 12 months

NORTHERN finance directors are bracing themselves for another tough 12 months with many expecting to see no improvement in trading conditions until September 2010.

Baker Tilly’s latest twice-yearly survey of mid-sized firms shows that 32% of businesses across the region expect conditions to remain the same over the next 12 months with nearly half (48%) believing things will become more difficult.

The survey also found that late payments were proving detrimental to business success with 43% of respondents citing it as a problem.

Nearly 65% said they were looking to cut costs over the coming 12 months with one third admitting to reducing recruitment or putting it on hold. Around 45% have already cut jobs.

Interestingly, lack of bank credit is no longer seen as the primary factor adversely affecting business performance.

Lack of consumer confidence is seen as more significant (35% versus 29%). More than 55% are concerned about an increased risk of criminal fraud impacting their business as a direct result of the recession.

Kevin O’Connor, managing partner for Baker Tillly across West Yorkshire, said: “Reduced concern about the availability of bank credit could be interpreted as a positive sign of an easing of credit conditions.

“However, as evidenced by the pressure on supplier payments, I suspect it more reflects businesses simply getting used to tough conditions and moving on.”

Despite major concerns the survey revealed some optimism among finance directors. Nearly a quarter see opportunities for growth citing expansion into new geographic markets as the key drivers.

Respondents however indicated they are disappointed with the effectiveness of government reaction to the financial crisis with 48% saying that their support for business was ineffective.

Mr. O’Connor added: “Despite some positive signs of a slow recovery, times will remain tough for business over the next year and finance directors need to remain ever-vigilant and keep control over costs and management of working capital.”