Business

Half of small firms lack cash for another month of lockdown, say accountants

Business owner hangs on door announcement of closure due to coronavirus quarantine
Business owner hangs on door announcement of closure due to coronavirus quarantine Business owner hangs on door announcement of closure due to coronavirus quarantine

HALF of all small firms will not be able to access the additional cash they will need to last four more weeks of lockdown, a survey has suggested.

The UK-wide poll of accountants representing 11,500 small businesses showed 39 per cent won’t be able to access cash for two more weeks of the lockdown, rising to 53 per cent for four weeks.

The figures were published in the Association of Chartered Certified Accountants (ACCA) and The Corporate Finance Network’s (The CFN) latest weekly poll/

The accountancy bodies said access to cash in the short and medium-term is still an uncertainty for many businesses as they struggle with trading conditions created by the Covid-19 pandemic.

There were some glimpses of optimism, with accountants expecting five per cent of businesses will be growing in three months’ time, compared to just two per cent last week. Respondents also said 11 per cent will probably be trading normally in 12 weeks’ time, compared to five per cent last week. This optimism may be due to the raft of proactive measures introduced by the UK government in recent weeks.

Claire Bennison, head of ACCA UK said: “Our members have told us they’ve been inundated with queries about recent rescue packages – CBILS and the furlough scheme.

“This shows the urgency of the current climate and the need from businesses for professional help to navigate the rescue schemes available, so they in turn can support their employees at this critical time.

“Indications show that HMRC’s portal has survived the initial influx of furlough applications to meet April’s payroll deadline, but we can’t stress enough the need for processes to be as straightforward as possible.”

Kirsty McGregor, founder of The CFN, and an accountant, added: “The CBILS (loan scheme) is not making its full impact felt yet – in my experience as a business advisor, SMEs do not want to take on debt, when they are potentially facing a decision about whether to continue in business and to then risk having this on their credit record for the future.

“The concern about the ability to withstand cash pressure in the very short term still stands, and it will be interesting to see the poll’s results in seven days’ time. It’s clear that businesses large and small are having to make very big decisions about their future viability.”