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Businesses need longer-term support to survive release of lockdown

Posted: 13th May 2020 by Clair Watmore cashflow, Coronavirus, Corporate Finance

Mark Grewer of Hunter Gee Holroyd based in York, 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to support the working capital needs of the country’s SMEs as he announces that the furlough scheme is to be gradually withdrawn.

He explains: “As part of our membership of The Corporate Finance Network across the UK, we had been asked to contribute to an exercise with eighteen other firms, where we identified how many of our clients had prepared cashflow projections.  The research, 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 they are likely to suffer a great shock when they return to work, as almost 70% have reported a reduction in trade as a result of Covid-19.

“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.”

Mark Grewer concluded “CBILS is still not working for most SMEs and facilities are not being approved quickly enough. 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.”

[ENDS]

Note for Editors

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

Number of business clients                                                            19,710                                                                                                                               

Clients who have prepared cashflows                                              2,029                10.3%

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

Background – SMEs, (typically less than 250 employees), account for 99.9% of the private sector employment in the UK and there are 23 million employees working for these private sector businesses[1].

About Hunter Gee Holroyd – www.hghyork.co.ukHunterGee Holroyd is a well-established company offering a range of chartered accountancy and business advisory services throughout North Yorkshire.  With a team of 45, it operates from three offices in York, Easingwold and Filey.  Its clients are owner managed and family owned companies in sectors which include agricultural, legal, hospitality, retail, coach and construction sectors, plus independent operators such as IT and technology services. 

For further information contact Clair Watmore, Hunter Gee Holroyd on 01904 655202 or email clair.watmore@hghyork.co.uk.

About The Corporate Finance Network www.thecfn.org,uk – The Corporate Finance Network consists of some of the most proactive and commercially astute regional, independent accountancy firms in the UK. They specialise in providing corporate finance advice for smaller transactions.

If you would like more information or to arrange an interview with Kirsty McGregor, please contact kirsty@TheCFN.org.uk


[1] https://www.gov.uk/government/publications/business-population-estimates-2019/business-population-estimates-for-the-uk-and-regions-2019-statistical-release-html