Coronavirus eating into SME cash

Over two-thirds of UK SMEs (69%) have reported significant pressures on their cash levels according to latest insights from business lender MarketFinance. This is in large part down to businesses paying for supplies earlier than anticipated because of Coronavirus-related stockpiling and fears of deeper disruptions to transport (road, air and rail) linkages.

Additionally, on orders and work that has been completed, payments are being delayed. Three-quarters (74%) of business owners reported invoices due to be settled at the end of February have not been paid yet (as of 10th March 2020) and that these were unlikely to be settled before the end of March 2020.

Over a third (36%) of business owners feared they won’t survive to Easter (6 weeks) if they were unable to secure some finance to bolster their business. Meanwhile, as economic conditions worsen, and with the possibility of widespread quarantine implemented across parts of the country, businesses will need to have financial and operational contingency plans in place to protect jobs, industry and communities.

Anil Stocker, CEO at MarketFinance, commented: “The impact of the Coronavirus spread is being felt by SMES across the UK as finance and supply chains are disrupted. At the best of times, only around half of these businesses are cashflow positive. Today, businesses are feeling a palpable sense of helplessness and isolation and there is a lack of specific information on how to cope with the crisis.”

“At the moment cash is king and if businesses are being starved of this cash, it will leave them stranded. Whilst policy efforts play out to contain the spread of Coronavirus, business owners should brace themselves for some turbulence and have a prepared mindset for the scenarios ahead.”

“Rishi Sunak has a golden opportunity to prove that he is a champion of UK SMEs. There is a role for government to work with businesses, banks and other lenders to ensure a resilient economy. It will be the smallest businesses that are most hit as they have the least bargaining power in global supply chains. They could, for example, give businesses VAT / tax ‘holidays’ to ensure that they have enough money to cover immediate costs.”