Bounce in SME confidence weakened by more small firms deciding to fold

Accountants representing over 20,500 SME clients in the UK have reported more businesses have decided to dissolve or liquidate in last week, despite a bounce in confidence about the long-term situation due to the Covid-19 pandemic.

The results are revealed in the latest ACCA UK and The Corporate Finance Network’s (CFN) SME Health Tracker, showing 5% of SMEs have decided to close compared to 3% last week.

Glimmers of optimism are apparent: if the lockdown lasts another two weeks, respondents reported that 18% of SME clients would be trading normally, an increase from 14% last week. This is probably due to the furlough scheme which gives employers a lifeline for the short term.

However, when it comes to access to cash during over a two week time-frame, the findings reveal little movement in the tracker, continuing to show CBILS is failing to provide the promised lifeline: 30% of SMEs will struggle to access cash to last two weeks of lockdown, compared to 29% last week.

Claire Bennison, head of ACCA UK comments: ‘Some SMEs are no better off. While the furlough scheme has offered some respite, many small businesses need to be prepared for when the scheme ends in June. SMEs need to be thinking about the long term too, as cash needs to be in place post-furlough – they need to explore all options, including the Bounce Bank loans announced as we closed the survey. This is where qualified accountants can help them navigate the options available as they need to look beyond CBILS.’

Kirsty McGregor, founder of The CFN, and an accountant, comments: ‘What we’re seeing here is a split in sentiment, optimism pushing against consistent concerns about cashflow. We’ve seen reports about more businesses intending to open – Greggs, Timpsons, B&Q, Persimmon – so this slow trickle of back to normal by high street names is filtering through to show cautious confidence for the long term. But my experience is that CBILS are still very slow – how will banks deliver these, plus the new Bounce Back Loans, when they’re already stretched and without resources?’

Confidence is reflected in the four-week look-ahead: 38% of SMEs will probably / definitely not be able to access cash to last four more weeks of lockdown compared to over a half last week at 53%. And looking further ahead to a possibility of 12 weeks of lockdown, 37% said they would probably/ definitely not be able to access cash to last, compared to 69% in last week’s results.

ACCA UK and The CFN explain that the tracker does not reflect views about the ‘Bounce Back’ Loans announced on the 27 April. Claire and Kirsty conclude: ‘Fundamental questions remain for SMEs. What are your needs – real estate, your employees, cash? The next two weeks will be decisive for SMEs and the accountants who work with them.’

- ends -

For media enquiries, contact:
Maurice Richmond
E: maurice.richmond@accaglobal.com
M: +44 (0)7802 951 809
Twitter: @ACCANews

Notes to Editors
The expert panel of accountants polled represent 20681 clients across the UK and the poll closed on the afternoon of 28 April 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

 

"While the furlough scheme has offered some respite, many small businesses need to be prepared for when the scheme ends in June. SMEs need to be thinking about the long term too, as cash needs to be in place post-furlough – they need to explore all options, including the Bounce Bank loans announced as we closed the survey. This is where qualified accountants can help them navigate the options available as they need to look beyond CBILS."

Claire Bennison - Head of ACCA UK

"What we’re seeing here is a split in sentiment, optimism pushing against consistent concerns about cashflow. We’ve seen reports about more businesses intending to open – Greggs, Timpsons, B&Q, Persimmon – so this slow trickle of back to normal by high street names is filtering through to show cautious confidence for the long term. But my experience is that CBILS are still very slow – how will banks deliver these, plus the new Bounce Back Loans, when they’re already stretched and without resources?’"

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