Thousands of small businesses say they are firefighting immediate concerns such as cashflow pressures and resuming operations safely ahead of lockdown lift

Small businesses are seeing their survival instincts kick-in amid fears over their ability to access cash required to operate post-lockdown.

The latest research from ACCA (the Association of Chartered Certified Accountants) and The Corporate Finance Network (CFN) highlights the growing number of SMEs seeking reassurance on how to manage their cashflow as the UK comes out of the Covid-19 lockdown.

ACCA and CFN’s Weekly SME Health Tracker surveyed accountancy practitioners advising 1,800 small businesses. They 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

Concerns were raised by companies on their ability to access cash from the government’s financial support schemes. The strain on firms continues: 89% of practitioners report SME clients are feeling more stressed, 78% have worse mental health and a worrying 11% are suicidal.

Long-term decisions are increasingly being put on the backburner with 60% of companies revealing they are deferring tax liabilities. However, one encouraging sign saw 64% believe these can be met within six months.

Claire Bennison, head of ACCA UK, says it appears SMEs are cautious to take on more debt: ‘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 SME’s concerns in the immediate term around the access to cash they had assumed would be available.

‘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.’

Kirsty McGregor, founder of the CFN, said: ‘The release of lockdown will be the riskiest time for most owner-managed businesses as they are feeling the pinch from all sides – they are unable to generate cashflow quickly due to their customers’ lack of credit; they are incurring additional costs in their own premises due to social distancing or PPE requirements and they are being chased for old debts themselves, putting their relationships with suppliers under pressure. It is no wonder that many business owners are choosing to hunker down for a while longer rather than stick their head up above the parapet just yet.’

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