The Corporate Finance Network is calling on the Chancellor to consider a further overhaul of the CBILS scheme, or to supplement this with other grants to support the working capital needs of the country’s SMEs as he announces that the furlough scheme is to be gradually withdrawn.

Research from nineteen accountancy firms, representing over 19,000 owner managed business clients who employ on average 20-80 staff each, shows that only 10% have prepared detailed cashflow projections, and will suffer a great shock when they return to work, as almost 70% have reported a reduction in trade as a result of Covid-19.

Kirsty McGregor, Founder and Chairman of The Corporate Finance Network, explained “Companies will not simply be able to pick up business where they left off. They have debts from deferred taxes, rents and overheads and they will now incur more expense as they are required to make their workplaces Covid-19 secure. In addition, trade will not return to 100% of pre-Covid levels immediately as social distancing will still require all sectors to take things slowly. This will ripple down the supply chain and as many SMEs have already extended their credit with suppliers past their agreed terms, they will struggle to order more materials and meet any demand from customers which they may have.  I would urge all business owners to prepare line by line cashflow projections and to engage with efficient credit control procedures in earnest.”

She went on to comment about the current initiatives provided by the Government “CBILS is still not working for most SMEs and facilities are not being approved. Our clients on the whole do not meet the criteria for the small business rates and retail grants and therefore I would urge the Chancellor to consider rolling out further grants for working capital support, or consider how else the British Business Bank can urge banks to lend more under the CBILS scheme.”

The survey was conducted on 12th May 2020 with 19 accountancy firms responding and the results are as follows:

Number of business clients 19,710

Clients who have prepared cashflows          2,029, equates to 10.3%

Clients who have suffered a reduction in trade         13,660, equates to 69%

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