Coronavirus

Small businesses voice cashflow fears ahead of lockdown easing, study finds

Small businesses are concerned over their ability to access cash required to operate post-lockdown, according to the latest research from ACCA and The Corporate Finance Network (CFN.

ACCA and CFN’s Weekly SME Health Tracker which surveys accountancy practitioners advising 1,800 small businesses 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

It also revealed that concerns were raised by companies on their ability to access cash from the government’s financial support schemes. It found 89% of practitioners report SME clients are feeling more stressed, with 78% having worse mental health and a worrying 11% said to be suicidal.

The research shows long-term decisions are “increasingly being put on the backburner” with 60% of companies revealing they are deferring tax liabilities. However, “one encouraging sign” is that 64% said they believe these can be met within six months.

Claire Bennison, head of ACCA UK, said it appears SMEs are “cautious” to take on more debt.

She said: “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.”

She added: “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.”

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