Pictured above: Neil Philpott
Instead of waiting for the axe to fall, private and family
businesses in the Midlands should face up to the reality of the
imminent cuts in public sector spending now and for those that do,
there could be unexpected reward, according to cash management
experts at PricewaterhouseCoopers LLP (PwC).
A significant number of private and family businesses in the
Midlands are reliant, both directly and indirectly, on public
sector contracts and for those affected, the proposed spending cuts
pose a real threat to business continuity. While businesses are
aware of the potential risks, many have yet to fully consider the
impact of public sector spending cuts on their businesses and
indirectly through their customers and suppliers.
Neil Philpott, private and family business expert at
PricewaterhouseCoopers in the Midlands, said:
"The spending cuts are not just an issue for companies with
public sector contracts - they will impact, either directly or
indirectly, on virtually every Midlands' company. For private and
family businesses the effects on the supply chain could pose real
risks by causing breaks in supply or putting pressure on cash flow,
so it is important for all businesses to plan ahead."
Companies should start by assessing how the forthcoming public
sector spending cuts are likely to affect their business and open a
dialogue with customers and suppliers at an early stage. In the
case of any existing public sector contracts, companies should
ensure they fully understand the terms and start to discuss with
their customer ways to improve efficiency and maintain
effectiveness. In doing so, there is an opportunity to strengthen
customer relationships and position the business as a favoured
supplier.
Neil Philpott, private and family business expert at
PricewaterhouseCoopers in the Midlands, said:
"We are finding that companies that initiate discussions with
their public sector customers and seek to work together at an early
stage, stand to benefit. Not only are they viewed as positive
supply partners, which could work in their favour when cuts are
being implemented further down the line, there is sometimes an
opportunity to renegotiate contracted services in a way that makes
them more flexible and short term, whilst also improving
profitability."
According to experts at PwC, some industry sectors have already
demonstrated that real value can be created by businesses working
more collaboratively with their suppliers and customers. The
automotive and food manufacturing industries in particular have
sophisticated supply chains that are resilient to economic,
regulatory and other industry issues.
Neil Philpott, private and family business expert at
PricewaterhouseCoopers in the Midlands, concluded:
"The fall-out from the cuts in public sector spending is likely
to be more far-reaching than many Midlands companies realise but by
acting early and working together with their customers and
suppliers it is possible to achieve rewards including strengthening
customer relationships and boosting short-term profitability."