Register to get free articles
Want unlimited access? View Plans
Already have an account? Sign in
Up to a quarter of SME businesses have no cash flow projection process in place despite the global economic crisis, according to a new poll by accountancy firm Azets.
During a recent digital event themed financial resilience, attended by 183 SME business leaders, 22% of respondents said they do not have a cash flow projection process in place. A further 6% said they do not know.
The revelation comes as analysts predict the UK will suffer the deepest recession of all the world’s largest economies in 2023 because of rising energy bills, high interest rates and a rise in failing businesses.
Insurer Allianz Trade forecasts business insolvencies in the UK will rise by 15% in 2023 to 27,100 as firms buckle under the weight of higher costs.
Meanwhile, latest ONS insolvency statistics for October to December 2022 (Q4), revealed the total number of insolvencies registered in 2022 was 22,109 – the highest number since 2009 and 57% higher than 2021.
Donald Boyd, partner and UK head of growth at Azets, said: “Far too many SMEs still run their business based on what’s in their bank account. Cashflow forecasting is critical. SMEs need a minimum 13-week cash flow projection or risk running out of money.
“We’re still seeing a lot of businesses living off Covid funding because it was easy to get bank debt. However, more and more businesses are now starting to feel the pinch having been lulled into a false sense of security.”
He added: “The most important thing you can do is to know exactly what’s happening in the next 90 days in your business, so you can seek help, if necessary, based on early warning signs, as opposed to having money in the bank one month and bills to pay the next, with only 45 days’ worth of cash left.”
