Keeping cash close

By Natasha Beckles | Sun, February 12, 2012 - 12:00 AM

Barbadian companies are placing greater emphasis on cash management as they seek to get through persistently trying economic times.

This is according to Barbados Private Sector Association head John Williams, who said many businesses are avoiding non-essential capital expenditure.

“We’re seeing deferral of some capital expenditure which is seen as unnecessary particularly . . . where they’re looking for an increase in demand and they’re not seeing it.

“But interestingly, we’re seeing investment in capital expenditure where there are guaranteed cost savings,” he said, such as information technology and automation.

Williams added that most publicly listed companies had reduced their dividend payments and many were writing off goodwill and intangibles in an effort to clean up their balance sheets. He said businesses that do a significant amount of business with Government are seeing “some slowdown in payment”, particularly value added tax (VAT) refunds.

This, he said, will impact liquidity and even threaten the viability of some businesses.

Noting that most companies which publish their financial results were experiencing reduced profitability or even losses, he said although there were some exceptions, the balance sheets of larger corporations were strong for the most part.

“This has helped them to ride out what has been depressed activity for the past two to three years but they are using up reserves,” he said.