Good cash management is key to growth now: DeloitteNovember 15th, 2008 - 8:34 pm ICT by IANS
New Delhi, Nov 15 (IANS) Careful cash management is the key to corporate growth in the current tight liquidity situation as there are now many merger and acquisitions opportunities, according to top officials of leading global financial advisory and services firm Deloitte Touche Tohmatsu.”Companies that have managed their balance sheets well and have cash in hand have an advantage over others who do not have liquidity in the current tight credit situation,” said Deloitte’s global chief executive officer James H. Quigley here Saturday.
As examples, he mentioned Warren Buffet’s investments, JP Morgan’s acquisition of Washington Mutual, and Wells Fargo’s buy-out of Wachovia in recent months after the current financial crisis broke out following the collapse of Lehman Brothers.
Quigley was answering questions at a media round table on the topic “Smart growth in tough times” here ahead of the World Economic Forum-India Economic Summit, starting Sunday.
“I don’t know who said it but it is very apt - a crisis is a terrible thing to waste,” Quigley said, adding “in these turbulent times there are many opportunities and companies must focus on grabbing them.”
He said companies should focus on fundamentals such as good working capital management, conserving cash, retaining top performers and introducing innovations continuously in every area of business to stay ahead in the these tough times.
Companies should try to forecast and monitor the cash position for every night, for the week, for the month ahead, for the next quarter and so on, he said.
Companies should also try to speed up payments by customers, defer payments to suppliers and maintain good relationships with their banks to tackle the tight liquidity situation.
“I am hopeful and optimistic that the unprecedented combined stimulus package of $4 trillion liquidity that governments across the world have pumped in will work,” Quigley said.
He felt now is the right time to spend public funds on roads, railways, runways and basic infrastructure to create jobs and boost economic activity and demand.
Referring to Deloitte’s own plans for India, he said: “Our staff strength in India is currently 8,500 and we expect it to go up to 12,000 by 2011.”
“India is the fastest growing market in our entire network,” said Deloitte’s Asia Pacific chief executive Chaly Mah Chee Kheong, adding his company expected that this would remain so despite the current turbulence.
Kheong said now when asset prices were declining to realistic levels, buyers would begin to come forward and the current slump conditions would gradually be overcome in the coming months.
Tags: deloitte touche tohmatsu, forum india, lehman brothers, liquidity situation, merger and acquisitions, stimulus package, tight credit, tight liquidity, working capital management, world economic forum