Buchler Phillips Quarterly Bulletin No.1

It’s just not cricket

Cricket lovers across the globe will admit that the game of cricket has changed forever.  Gone are the memories of donning the whites and whitening our boots in preparation for the new season. Instead, we now have a kaleidoscope of colours on the field and a cacophony of sounds of cheerleaders and fans at the international 20/20 matches. I suppose everything changes over time. This is indeed true of the insolvency world….

…..So what’s changed?

A recovering economy, low inflation and interest rates - this combined with owner owned companies reluctance to seek help and Banks employing their own review system that seems to have led to fewer formal insolvency appointments in the last couple of years. However, it seems contradictory in terms to hear about the number of companies in financial difficulty.  It was also intriguing to learn from some of our Clients, how difficult times are as a result of the banks conservative lending stance.

Admittedly, there also seems to be a lack of internal disciplines leading to poor cash flow management, lack of timely management accounts and some CEOs being completely out of their depth, having either inherited the job due to retirement or passing away of previous incumbents.

However, the good news is that Restructuring and Turnaround work is up. As an industry, we must see this as a challenge. With the plethora of skills available to us we need to find innovative methodologies to get involved in making a positive contribution in tidying up our business community.

Interest rates & SME’s

It must be said, not since the 1940’s has any government had a fixed low interest rate for their entire term in power. With all eyes on the outcome of the election some suggest a messy vote could push a rate rise even further back. Although, the Bank of England Governor Mark Carney has made it clear that the next move in interest rates will be up, to quash any talk of Deflation.

With a bout of quantitative easing to stimulate the economy, one wonders if a hike in interest rates in the next 12 to 18 months could prove the recovery to be sustainable. If interests rates are jacked up, then it will be interesting to see how some new SME’s would react bearing in mind they have never experienced a drain on cash flow over the last 5 years.