SMEs hardest hit by Covid-19, finds ACCA global research

A collective effort is needed to help the future viability of SMEs, says global accountancy body

Due to the global pandemic, smaller businesses – those with 200 or less staff – are pessimistic about their future revenues and face greater challenges than their larger counterparts, reveals ACCA’s Covid-19 global survey ‘The Road to Recovery.

As the United Nations (UN) marked Micro, Small and Medium-sized Enterprises Day on the 27 June 2020 with the aim of supporting SMEs through the global pandemic, ACCA’s research shows that SMEs are facing stopped or reduced customer purchases and cash flow problems compared to larger businesses.

ACCA is therefore calling on the most profitable and least affected by the pandemic to work with governments to save smaller businesses, who may be in their supply chains, from folding as a result of the pandemic and the ensuing economic crisis.

The Road to Recovery updates ACCA’s March Covid-19 global survey: inside business, impacts and responses, and shows that over the last three months the situation has not improved for SMEs with almost 60% now citing customer purchases as having stopped or decreased.

SMEs’ cashflow also follows a similar trajectory, with 53% of SME respondents indicating this is now a problem, compared to 46% in the March survey. SMEs are also more pessimistic about their revenue predictions, with 85% predicting negative revenue compared to the last year. Nearly one quarter of SMEs are still focussed on the short-term period, compared to a tenth of their larger counterparts, due to SMEs having to manage their operating fundamentals to survive.

Aleksandra Zaronina, ACCA’s global head of SME Professional Insights says: ‘This presents a concerning picture, especially given the range of support measures introduced by governments around the world to help SMEs survive the pandemic and its lockdown. SMEs are having to face the harsh realities of their revenues. In March, just over half of SME respondents had conducted a financial reforecast - now this has risen to 80%. Globally, SMEs are therefore seeing and feeling the realities very clearly, and they need support to survive.’

ACCA is also recommending that policy makers and governments to support and enable recovery, to review their support packages with an acceptance that eligibility will need to change over time.

Aleksandra Zaronina explains: ‘Governments need to think long-term about next steps, and work closely, and in coordinated manner, with business and international organisations to deliver support packages that may need to be in place long after the pandemic has hopefully passed. SMEs need a robust international support ecosystem oriented towards the same goals. This is a global crisis, and so governments, business and international organisations like the UN will need to work together to find solutions that work at national, continental and global levels. That’s why we’re supporting the International Chamber of Commerce’s Save our SMEs campaign.’

Chris Southworth from the ICC United Kingdom adds: ‘We welcome ACCA support in championing our global Save our SMEs campaign. SMEs are the lifeblood of the global economy and an integral part of global value chains so it’s essential we do everything we can to ensure they have the support they need, particularly in the emerging markets where resources can be stretched. Building a more sustainable, inclusive economy means putting the needs of SMEs at the heart of everything we do.’

Jamie Lyon, the report author and head of business management at ACCA, says the roadmap to recovery advice detailed in the report is a framework policy makers, governments and businesses alike can follow: ‘Through our “roadmap to recovery”, we’re recommending that organisations follow the “three As” – Act and respond sustainably to the immediate crisis in the short term; Analyse the different information sources to start to build the path to recovery in the medium term and Anticipate how strategies need to evolve over the longer term. These 3 As work for policy makers and governments as well as businesses – it’s a roadmap we all need to be following.’

ACCA’s roadmap to recovery is available here. This June survey of over 4,500 ACCA members follows the publications of ACCA’s report COVID-19 Global Survey: Inside Business Impacts and Responses in April 2020, and continues to track ACCA sentiment around the world on the impact of COVID-19 and examines how organisations are responding.

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Notes to Editors
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"SMEs need a robust international support ecosystem oriented towards the same goals. This is a global crisis, and so governments, business and international organisations like the UN will need to work together to find solutions that work at national, continental and global levels. "

Aleksandra Zaronina, global head of SME Professional Insights - ACCA

"We welcome ACCA support in championing our global Save our SMEs campaign. SMEs are the lifeblood of the global economy and an integral part of global value chains so it’s essential we do everything we can to ensure they have the support they need, particularly in the emerging markets where resources can be stretched. Building a more sustainable, inclusive economy means putting the needs of SMEs at the heart of everything we do."

Chris Southworth - ICC United Kingdom