Dedicated to improving manufacturing efficiency

UK businesses owed £133b since lockdown, urgent need for funding to plug cash flow gap

UK businesses are returning to work this month with some trepidation, finds fintech business lender MarketFinance. Nine in ten businesses are waiting to be paid an average of £148,917 for work done pre-lockdown, half of those that applied for CBILS loans have been declined and cash flow will be strained as invoices take longer to be settled. It’s little wonder that 85 per cent of business owners have felt a sense of loss of control over the past three months.

Finances

With £148,917 still owed to them since March 2020, the vast majority of businesses (81 per cent) are also expecting to wait longer to be paid for the goods they provide and work they do from now on. Half anticipate waiting anywhere between 14-30 days beyond normal terms (45 days).  Whilst 15 per cent reported they could be waiting anywhere between three-six months longer to be paid for work.

Only 43 per cent of businesses that applied for a CBILS loan were successful in securing it. The typical loan taken by these businesses was £211,667, though they applied for almost double this amount.

Anil Stocker, CEO at MarketFinance, commented: “The reopening of the UK’s high streets marked the first buoyant moment for UK businesses in months but it might well be the calm before the storm. 

“Businesses are facing a three-pronged assault on their finances. First up, its alarming that only half of their CBILS loans are being granted, then we learn that they have close to £150k in outstanding payments since the lockdown began and now, it’s likely that they will have to wait twice as long to get paid for new work they do whilst demand and economic activity normalises. This coupled with a very moderate outlook for trading conditions, ‘rent quarter day’ this week and uncertainty about their workforce, no doubt this will put further pressure on businesses.”

Stocker added: “Given the continuing uncertainty around how the country returns to ‘business as usual’, I would urge business owners to look beyond their banks and seek advice as soon as from other lenders, business advisors and mentors. The earlier they do this, the wider the range of potential solutions they’ll have open to them.”

Trading environment

As the lockdown has eased and shoppers return to the high streets, almost half (45 per cent) of businesses are optimistic that there is pent up demand for their products and services which they are eager to serve.

This said, most businesses only expect a conservative 10 per cent increase in sales over the next three-four months. While opinion is polarised on prospects; a fifth (19 per cent) anticipate a 25-50 per cent increase in sales whilst one in six (15 per cent)  expect a decrease in sales of more than 75 per cent.

Longer term, business owners have revised down their expectations of when they anticipate things to return to normal. In March, the majority (56 per cent) felt business would normalise by September 2020. However, now the majority (57 per cent) feel it could take as long as one-two years and are planning for this.

Employment

Most businesses (45 per cent) anticipate only returning up to half of their furloughed staff to work in July and a quarter are likely to be kept on furlough as part of the extended scheme as the economic picture and business climate plays out. The future remains less certain for the remaining quarter of furloughed staff, who could well be made redundant.

Office space 

Of those businesses that have a physical location (office, warehouse), over two thirds (68 per cent) are negotiating rent / lease reductions with landlords whilst a third have decided to leave their premises entirely because working from home has proven successful.

Feeling in control

Having faced a number of external shocks as a result of the pandemic, 85 per cent of business owners have felt out of control in their business over the past three months. Given the impact of COVID-19, the lockdown, recession fears and a no-deal Brexit 60 per cent of business owners feel exposed to conditions beyond their control.

Further information visit: www.marketfinance.com or follow us on LinkedIn and Twitter.

Related Articles

MarketFinance acts to plug £20b cash flow gap from furlough payroll strain

Already cash strapped SMEs across the country will be (up to) £20b out of pocket when the first round of salaries are paid to the 8…

Sage research shows two thirds of UK small and medium size businesses plan to access the Government’s Job Retention Scheme

Sage, the market leader in cloud business management solutions and the UK’s largest payroll provider, today releases the first…

Business needs furloughing flexibility now, to ease out of lockdown, says FTA

The Government’s commitment to increasing the flexibility of its furloughing scheme has been welcomed by the logistics industry…

Manufacturing industry optimistic for recovery from COVID-19 despite supply chain concerns, finds SteelScout survey

A new survey from SteelScout has found that more than 60 per cent of professionals in the manufacturing industry expect the sector to…

UK manufacturers need £650m in April to survive 2020

​​​​​​​UK manufacturers are facing a precarious future according to insights1 from fintech…

Government loans only appeal to half of business owners

Business finance lender MarketFinance sought the views of business owners following the wide ranging measures announced by the Treasury…