Tax & Accounting News

Businesses Can Be Own Worst Enemies, Warn Accountants

27/01/2009

Businesses must be prepared to listen to professional advice and make harsh decisions as they fight for survival in a tough economic climate, say London accountants Harris Lipman.

Martin Atkins, a partner at the firm and an insolvency specialist, says some businesses are still failing to face up to reality, even when presented with clear evidence that swift action is necessary to get back on track.

He cites examples from recent cases where Harris Lipman has provided turnaround advice, which include directors refusing to initiate redundancies, even when businesses were in severe financial difficulties.

In another case, although directors agreed to a move to smaller, cheaper premises, they then wanted to go ahead with a costly refit of the new offices when their business was already in debt.

He said: “In the current economic environment, businesses must be prepared to make some difficult decisions, rather than just hoping for the best. If they don’t, they can end up being their own worst enemies.”

Martin also warns that directors and owner-managers must make sure they are fully aware of key financial issues that could affect the stability of their business.

In one case, a member of staff failed to inform directors that the company’s factoring arrangement had been withdrawn – under which the bank advanced money against invoices to improve cash flow, then chased debtors for payment – seriously affecting its cash flow.

For more information, contact Harris Lipman on 020 8446 9000.

 

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