Corporate Finance

Survey finds ‘marked differences’ in SME and corporate cashflow planning

There are “sharp distinctions” in the approaches to managing cashflow and business continuity planning by SMEs and the corporate world, according to the latest ACCA UK and The Corporate Finance Network (The CFN) SME Recovery Tracker.

Closing on the 29 July, the results show that 86% of accountants in the corporate sector have business plans and financial forecasts in place, with the majority reviewing these regularly on a weekly basis. Whereas just 35% of SMEs have a business plan, showing that credit terms and business continuity between these two sectors are “being handled in very different ways”.

Despite recent announcements from the UK government about returning to the work place, some 33% of SMEs are still concerned about opening their businesses with current social distancing rules in place, while the corporate sector’s responses show just a fifth are unconfident about returning to work, with 47% saying they are “very confident”.

It also found that tax deferrals have been a cashflow management choice for SME clients, and the latest results for the last two weeks show 70% have made this decision, with 58% of those saying they can make their tax liabilities in six months’ time.

Corporate respondents reveal where investment has been made with employees in their organisation, with a strikingly low 7% saying their organisation has management training in place for remote coaching and leadership. However, 47% say additional IT equipment has been made available.

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Kirsty McGregor, founder of The Corporate Finance Network said: “The corporate world is recognising the importance of cashflow planning and this is something SMEs can also embrace nowadays with the cloud and digital tools which are available and make this far easier than in previous recessions.

“Couple this with professional advice from accountants, SMEs can work towards creating a more resilient business. We know this is a massive challenge, but help is out there and supporting the accountants in this work is the sole function of our joint campaign across the profession to #LeaveNoBusinessBehind.”

Claire Bennison, head of ACCA UK, added: “In some ways, the different approaches to business planning between SMEs and corporates can be understood, but there are lessons to learn from each other here.

“Working with digitally adept accountants means SMEs will get the advice they need about how to balance the books, to stabilise their business models and plan ahead. However, sentiment shows that recovery appears to be unpredictable for SMEs – and this is alarming.”

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