By Wayne Dewsnap, Managing Director, Exact UK

Growth in the UK continues to be fairly flat with consumer confidence impaired by spiking commodity prices, a soft housing market and the headwinds from necessary fiscal consolidation.

These factors, combined with the ongoing process of household and bank balance sheet repair will continue to restrict growth moving forward.

Within this challenging macro-economic environment, many finance professionals find themselves tasked with managing their organisation’s financial risk with limited resources and expertise. Furthermore, the increased volatility due to shifts in the global economy means there are reduced windows of opportunity to launch and conquer markets. Within this context, the CFO has to try and control the risk associated with loans, debts and the viability of suppliers and customers.

At the same time, finance departments are often under-resourced in terms of managing expense control and compliance programmes and may not have the relevant expertise to develop and execute new strategies to deal with the changing economic environment. The situation is compounded by reduced visibility into supplier and buyer organisations, whose credit control and cash flow might seriously disrupt normal operations.

Nevertheless, finance professionals have access to a wealth of data, but are struggling for a variety of reasons to isolate, interpret and track the key metrics with which to affect change.

Managing expansion in a difficult economic climate

In an independent survey of senior UK finance and management professionals by research and advisory company K2 Advisory in association with Exact more than 370 UK finance professionals were interviewed to assess the effectiveness of their ability to financially manage expansion in the current economic climate.

One of the main pain-points shared is the fact that customers are becoming slower to pay for services, which of course impacts cash-flow and increases the pressure on the credit control function.

An additional pain-point that became apparent was the financial system or systems that many of the respondents were using. Many felt that their financial system was outdated, while a significant minority felt that their organisation was growing rapidly and that their systems and processes were struggling to keep pace.

In order to grow sustainably, it becomes critical to successfully manage margins. In the current economic climate, margins are being squeezed from rising input costs (in terms of commodity and energy prices) as well as the inability to pass these costs along due to low interest rates and the level of consolidation happening in most industries that is creating leaner, more efficient suppliers and distributors.

In order to grow sustainably, organisations need tight control of costs while safeguarding the perception that they are creating value for their customers, employees and owners. So how does ‘UK Plc’ measure up in terms of planned growth rates?

Although just over a third of respondents expected revenues to remain flat or decline, nearly two-thirds of the finance professionals questioned were targeting growth. Of those, the majority were anticipating growth of above 5%, while 21% of those surveyed anticipated growth of more than 10%. The main challenge was the management of profit margins while going for revenue growth. Certainly, this will be difficult in respect of the aforementioned macro-economic factors, but a lack of business transparency is compounding the challenge.

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