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Cash flow and working capital main barrier to achieve business goals

Insolvency enquiries decrease


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According to the second Deloitte Black Ink survey, in terms of main barriers to business goals, the survey showed that suburban accounting and legal firms continue to see cash flow and working capital as the main barrier to achieving business goals, almost 29% compared with 27% in the last survey.

The concern about consumer sentiment, however, dropped significantly since the beginning of the year from 22% to eight per cent. Instead, the ‘lack of time to plan and implement’ and ‘government policies’ were of greater concern.

Deloitte Black Ink®, partner Simon Cathro says the global financial crisis (GFC) is driving suburban accounting and legal firms and their clients to seek specialist advice earlier in their cycle of financial difficulty.

In order to address these issues, suburban firms’ have continued to increase the use and frequency of consulting an external advisor with almost 94% of respondents having used an external advisor in the six months to June 2009. The survey undertaken in December 2008 reflected a similar high percentage of respondents with 85% stating that had used external consultants in the previous six months to assist in advising their clients.

In addition, the survey shows a slight drop in the number of insolvency enquiries over the last six months.

“All suburban accounting and legal firms have clients in financial difficulty in the three months to June, compared with 80% of respondents in the three months to December,” Mr Cathro said.

“The survey shows that positive sentiment towards the next 12 months improved by 8%, up from almost 59% in December 2008 to just over 67% in June 2009.

“We believe this shift in optimism is the result of solid demand for clients focussed on managing out of volatile times,” he said.

Black Ink® is an invitation only member network of accounting and legal firms where members have access to specialist advice from Deloitte to help comprehensively service their clients’ needs.

“In the past six months the Black Ink® network has received a fivefold increase in enquiries from members seeking specialist advice on tax, superannuation, refinancing and restructuring options, small business scenario planning and insolvency advice,” he said.

The survey revealed that respondents are most commonly seeking specialist tax advice, “possibly due to the end of financial year,” Mr Cathro suggested.

Almost 35% of Black Ink® respondents indicated they have clients who are non residents, with a further 28% of respondents with resident clients with offshore assets/ interests.”

According to Mr Cathro, this level of overseas interest highlights the need for firms to seek high level technical advice from specialist advisors such as Black Ink®.

Insolvency enquiries decrease

The indications are that clients of suburban legal and accounting firms are managing these volatile times better, with fewer insolvency enquiries since the beginning of the year.
In December 2008, almost 11% of Black Ink® survey respondents indicated they had received more than six enquiries about insolvency, whereas in the three months to June 2009, no respondents recorded more than six enquiries.

Mr Cathro said that it is too early to tell if the global financial crisis is in the early stages of recovery. However, this figure does show a step in the right direction. “If the next survey shows a similar drop in the level of insolvency enquiries, it would appear that Directors are taking the right steps earlier in the process in order to manage their businesses out of volatile times.”

“Those that do so will be in a position to grow as the global financial crisis ends.”

Contacts

Name:
Karina Randall
Company:
Deloitte Australia
Job Title:
Corporate Affairs & Communications
Phone:
Tel: + 61 2 9322 3778, Mobile: +61 414 823 712
Email
karandall@deloitte.com.au

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