• Complexity is stalling the funds landing with SMEs; 1 in 10 SMEs have already had to close their business
ACCA UK and The Corporate Finance Network’s (The CFN) weekly tracker of SME health reveals that a third of businesses will probably not be able to access the cash they need to last more than two weeks of lockdown (33%).
And if the lockdown lasts another four weeks, respondents estimate that 38% of the businesses they advise will definitely not be able to access the additional cash they’ll need to survive, compared to 26% in last week’s tracker.
The latest update about the impact of Covid-19 on SMEs shows over 1 in 10 clients have already had to liquidate/ dissolve their company with 92% of private sector members surveyed not having yet made a CBILS application, although 42% say they may have to apply soon. A further 7% have had an application rejected.
Head of ACCA UK Claire Bennison says: ‘Our members' helpline is being contacted by accountants working with SMEs, striving to secure loans and cash. What they’re experiencing is frustrating for all involved – delays and administrative complexity that undermines the rescue package that’s being offered. We totally understand solutions are having to be found at pace, but there’s a rising sense of distress as SMEs face the challenge of working out how they’ll pay their teams over the coming weeks.’
Kirsty McGregor, CFN’s Founder adds: ‘This is now the third week of this tracker, and we’re not seeing any improvement for SMEs filter through the system. The announcements don’t translate into cash for businesses. I am also really worried that the HMRC Job Retention grants won’t be received by businesses before their April payrolls are due to be paid. Somehow, we need to find the much-needed ability to get cash moving, this week. It’s understandable that banks need to do their due diligence and check their processes and systems, but something immediate needs to happen that solves the limbo many SMEs are finding themselves in.’
ACCA UK and CFN are recommending that real-time analysis needs to be done by fiscal policy makers to analyse the effectiveness of the measures put in place. Stimulus and support measures must be kept open and flexible in order to mitigate the biggest risk faced by economies as the impact of the crises evolves.
A key concern for SMEs and their advisors is that many SMEs are facing April payrolls and many businesses are unsure if they can pay their furloughed staff, even though they’ll then be able to recover this from the government.
Kirsty McGregor concludes: ‘The banks are still well behind any real movement, perhaps due to the sheer scale of what needs to be done. We understand this is a very fast-moving situation, but what’s needed is short term finance with cash reimbursement. Ultimately, loans are taking too long and while the banking sector gets itself organised, we need immediate cash flowing to SME’s so they can support their employees.’
Claire Bennison ends: ‘A separate poll amongst 2,000 ACCA UK members, which we announced last week, has also revealed that while government stimulus packages have been put in place, 18% of respondents said these are likely to be effective, compared to 43% saying they were unsure if they would eventually make a difference. The challenge for us all is to find ways to remove this uncertainty.’
- Ends -
Kirsty McGregor and Claire Bennison are available for interview. Kirsty McGregor can be contacted at kirsty@TheCFN.org.uk
Notes to Editors
The expert panel of accountants polled represent approx. 8,811 clients across the UK and were polled on the 13 April 2020.
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.
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 kirsty@TheCFN.org.uk