11 - 17 April 2001

Search all issues

powered by FreeFind


Send Your Feedback!





The liquidity crisis

The problem of cash flow or liquidity has led many companies to rethink the future before them.

It is the small and medium sized service companies that are suffering most, with monies owed to them never materialising.

But why is this cash flow problem so extensive? The reason goes back to some unique factors that have led to this state of affairs.

One has to go back a few years and then one sees that some projects were catapulted to stardom – but no one seems to have asked where the finances were coming from or indeed, how they were to be financed.

The projects of course went ahead with only partial funding from the banks and the rest, as we all know, originated from a series of traditional arrangements with a number of companies providing for logistical and technical support.

The end result landed many companies in the lion's den, with a plethora of barters that did nothing, or little at all, to alleviate the cash flow problem.

As in many such projects, one thing led to another and sooner rather than later, more companies became entangled in the barter system.

The vicious circle led to barters' galore but no money.

Parallel to this, the banking sector started to employ procedures which were more serious or, shall we say, more consonant with the banking world.

There were also more questions asked, such as where the money was going and pertinent banking investigations into the way money was being spent ensued.

As it transpired very much later, that many companies were being run as fiefdoms with many individuals siphoning off money with no or little investment return.

The other issue, which cannot be discarded, is the growth factor when it came to different companies. Some companies, or, shall we say, a whole horde of companies, have grown too fast - far too fast -and this has led to bankruptcy.

What is the solution to all these liquidity problems?
And who can influence change here?
The role, as one sees it, lies with a culture in the banking sector, a culture in the way of making business and in meeting payments.

The Central Bank has a very important role here and what is needed are stronger pronouncements on the chemistry governing such a fiscal environment.


When surveys are not taken seriously

The recent TV survey unravels a current trend, which is not totally realistic. It castigates the politics but lends adulation to juke boxes with no content or oomph.

Gaining points are Radio Calypso and Capital Radio, two stations which regurgitate tonic and soda pop and nothing else. The radio stations which are discussion-oriented have declined and this shows that there is a certain fatigue when it comes to politics.

But one should take the longterm view, and advertisers should be wary over statistics presented in package form.

Yet, it has to be said that the populist music stations will not survive in popularity over the long term.

We have seen the popularity stakes changing between Island Sound, Bay Radio, Smash and now Capital Radio and Calypso.

Investing in audiences means investing in resources which is what makes to the cream when it comes to long term quality and content.



The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt