Turbulence, stress and struggling for survival - SMEs and the Covid-19 experience

As UK businesses cautiously return to trading, a review of the last eight weeks of the ACCA UK and Corporate Finance Network (CFN) SME Health Tracker reveals that the lockdown has had a marked impact on SMEs’ financial outlook.

Since early April, the Tracker has gauged SMEs’ financial health when the lockdown officially began on the 23 March 2020. Across the eight weeks, the total survey pool of accountancy practitioners that responded represented over 62,000 SMEs.

Averages across the eight-weeks of data indicate a turbulent time for SMEs, who expressed concerns about their cash reserves and survival, alongside experiences of accessing government support.

On the 15 April, 54% SMEs said they could access cash to last another four weeks of lockdown; this fell to 42% on the 4 May. Conversely, 13% of accountants said their SMEs were trading normally in April, compared to 25% at the end of May.

Tax obligations have also been a concern for SMEs with 58% on average deferring tax payments, with only half admitting to their accountant that they will be able to meet these liabilities in six months.

And as the lockdown continued, more SMEs told their accountants they had decided to fold their business – from 3% in April to 5% per cent on the 26 May.

In the last three weeks, accountant practitioners also reported that their SME clients had shared their worries and concerns with them. 83% of practitioners said their SME clients were feeling more stressed and anxious than usual; 73% said their clients were having trouble sleeping, 67% reported worsened mental health and 50% that their clients had shared feelings of not being able to cope.

Kirsty McGregor, founder of the CFN, says: ‘You can see the impact of the government policies across the time of this tracker, with official announcements changing the mood in the short term. Many of the measures came too late for businesses that have now decided they’re going to liquidate – by the week the Job Retention Scheme opened for applications we were already seeing a spike. The stats also show that a very low percentage of the overall business population is willing to take on any substantial new debt.’

Claire Bennison, head of ACCA UK, says: ‘Over the eight weeks, CBILs have been a hurdle for SMEs: our figures show that just 1% of SME clients progressed to full application with just 6% approved. Also, Bounce Back Loans seemingly had no effect at all on clients’ cash outlook. Some pain points have been avoided for the time being, but the picture in eight weeks could be very different again as SME owners make more tough decisions about how they can move on in still difficult trading conditions.’

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Notes to Editors

ACCA UK and CFN SME Health Tracker: Timelines

Covid-19 Timeline

16 March

UK advises everyone against non-essential travel and pubs, clubs and restaurants

20 March

PM orders all pubs, cafes and restaurants to close / CJRS announced

23 March

Nationwide Lockdown announced and CBILs launched

26 March

Self Employed income support scheme announced

3 April

CBILS amended to prevent lenders requiring personal guarantees

15 April

CJRS cut-off date extended to 19 March

20 April

CJRS opens for applications

27 April

BBLs announced

10 May

3 step conditional plan announced

12 May

Chancellor announced JRS would be extended

13 May

SEISS opens

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For media enquiries, contact:

Maurice Richmond
E: maurice.richmond@accaglobal.com
M: +44 (0)7802 951 809

Nadia Manuelli
E: nadia.manuelli@accaglobal.com
M: +44 (0)7808 940139

Monique McKenzie
E: monique.mckenzie@accaglobal.com
M: +44 (0)7725 613 447

Twitter: @ACCANews
www.accaglobal.com

About SMEs
SMEs, (typically less than 250 employees), account for 99.9% of the private sector employment in the UK and there are 22 million employees working for these private sector businesses.

About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA UK has 167,000 members and future members. Globally, ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development.

Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com

About The Corporate Finance Network
The Corporate Finance Network – www.thecfn.org.uk - The Corporate Finance Network consists of some of the most proactive and commercially astute regional, independent accountancy firms in the UK. They specialise in providing corporate finance advice for smaller transactions.  Kirsty McGregor can be contacted at info@TheCFN.org.uk

 

"Over the eight weeks, CBILs have been a hurdle for SMEs: our figures show that just 1% of SME clients progressed to full application with just 6% approved. Also, Bounce Back Loans seemingly had no effect at all on clients’ cash outlook. Some pain points have been avoided for the time being, but the picture in eight weeks could be very different again as SME owners make more tough decisions about how they can move on in still difficult trading conditions."

Claire Bennison - Head of ACCA UK

"You can see the impact of the government policies across the time of this tracker, with official announcements changing the mood in the short term. Many of the measures came too late for businesses that have now decided they’re going to liquidate – by the week the Job Retention Scheme opened for applications we were already seeing a spike. The stats also show that a very low percentage of the overall business population is willing to take on any substantial new debt."

Kirsty McGregor, founder - The Corporate Finance Network (The CFN)