Small businesses voice cashflow fears as UK economy prepares to open shop

Thousands of small businesses say they are firefighting immediate concerns such as cashflow pressures and resuming operations safely ahead of lockdown lift

Small businesses are seeing their survival instincts kick-in amid fears over their ability to access cash required to operate post-lockdown.

The latest research from ACCA (the Association of Chartered Certified Accountants) and The Corporate Finance Network (CFN) highlights the growing number of SMEs seeking reassurance on how to manage their cashflow as the UK comes out of the Covid-19 lockdown.

ACCA and CFN’s Weekly SME Health Tracker surveyed accountancy practitioners advising 1,800 small businesses. They revealed clients’ three main fears were the ability to manage cashflow pressures, implementing the practicalities of social distancing guidelines at work, and the late payment of invoices.

Key short-term findings from this week’s tracker show:

  • 23% of SMEs are unable to access cash to last another two weeks of lockdown
  • 14% of SMEs won’t have access cash to last four weeks of lockdown
  • 5% intend to dissolve, up from 4% on last week’s findings

Concerns were raised by companies on their ability to access cash from the government’s financial support schemes. The strain on firms continues: 89% of practitioners report SME clients are feeling more stressed, 78% have worse mental health and a worrying 11% are suicidal.

Long-term decisions are increasingly being put on the backburner with 60% of companies revealing they are deferring tax liabilities. However, one encouraging sign saw 64% believe these can be met within six months.

Claire Bennison, head of ACCA UK, says it appears SMEs are cautious to take on more debt: ‘Members have revealed their frustration with the loan schemes, access to cash is not happening quickly enough meaning cashflow is weak. We’re also finding complications with financial support schemes such as the turning away of directors from the furlough scheme because they receive annual PAYE, despite these payments being eligible. Issues such as these are compounding SMEs' concerns in the immediate term around the access to cash they had assumed would be available.  

‘ACCA maintains loan schemes should be extended to any FCA regulated provider and has suggested immediate liquidity support could be provided to CBILS applicants based on a proportion of normal operating revenue. Firms are prolonging their future planning demonstrated by the rise in tax liability deferrals. Through our recent roundtables, we’ve heard from manufacturing and hospitality industries that there isn’t the level of confidence to move forward smoothly and efficiently.’

Kirsty McGregor, founder of the CFN, said: ‘The release of lockdown will be the riskiest time for most owner-managed businesses as they are feeling the pinch from all sides – they are unable to generate cashflow quickly due to their customers’ lack of credit; they are incurring additional costs in their own premises due to social distancing or PPE requirements and they are being chased for old debts themselves, putting their relationships with suppliers under pressure. It is no wonder that many business owners are choosing to hunker down for a while longer rather than stick their head up above the parapet just yet.’

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For media enquiries, contact:
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

Helen Thompson
E: helen.thompson@accaglobal.com M: +44 (0)7725 498 654

Twitter: @ACCANews 
www.accaglobal.com

Notes to Editors
The expert panel of accountants polled represents 1,800 firms across the UK and the poll closed on the afternoon of 26 May 2020.

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

"Members have revealed their frustration with the loan schemes, access to cash is not happening quickly enough meaning cashflow is weak. We’re also finding complications with financial support schemes such as the turning away of directors from the furlough scheme because they receive annual PAYE, despite these payments being eligible. Issues such as these are compounding SME’s concerns in the immediate term around the access to cash they had assumed would be available. "

Claire Bennison - Head of ACCA UK

"The release of lockdown will be the riskiest time for most owner-managed businesses as they are feeling the pinch from all sides – they are unable to generate cashflow quickly due to their customers’ lack of credit; they are incurring additional costs in their own premises due to social distancing or PPE requirements and they are being chased for old debts themselves, putting their relationships with suppliers under pressure. It is no wonder that many business owners are choosing to hunker down for a while longer rather than stick their head up above the parapet just yet."

Kirsty McGregor - Founder, The CFN