Money

Scottish SMEs 'more than twice as likely to go bust'



SMEs in Scotland are going into liquidation at twice the rate of those UK wide, according to a survey of accountants by ACCA UK.

ACCA members questioned since April indicated 13% of small to medium sized firms in Scotland were choosing to take that route, compared with 5.4% in the UK.

The latest ACCA UK and The Corporate Finance Network (The CFN) SME Recovery Tracker suggests nearly one in three business owners struggle to sleep due to the pressure they are under, while one in five say they cannot cope any more and the vast majority say they are more stressed than usual.

Craig Vickery, head of ACCA Scotland, said: “This snapshot view from Scottish accountants about their SME clients reveals that many small business owners are having to make really difficult decisions about their futures.

“Since beginning this survey in April we’ve seen cashflow concerns steadily rise and with so many unable to take on more debt nor return to full productivity, the costs are stacking up with no relief.”

ACCA questioned accountants representing more than 15,530 SME clients, and 83% reported SME clients were feeling more stressed and anxious than usual. A third were not sleeping compared to 21% two weeks previously and nearly a fifth said they were not coping.

Closing on July 15, the UK-wide results found that over the last two weeks:

  • 23% said current social distancing rules make it difficult for clients to open and trade.
  • 29% said SME clients had made their credit terms more favourable to get cash moving.
  • 66% had client who deferred tax payments, and of these only 34% say they will be able to meet their tax liabilities in six months.
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Kirsty McGregor, founder of The Corporate Finance Network, said: “Today, we launch the nationwide #LeaveNoBusinessBehind campaign with a call to support every business owner, so they can get back to business health and start thriving again.

“Financial forecasts are an essential part of this survival – they’re a dynamic and necessary forward-looking roadmap. But we know this planning and forecasting will involve tough discussions between the SME owner, their accountant, lenders and families and there is an understandable reluctance to focus on the glaring reality of the situation.

“The Government has introduced a raft of measures which we have welcomed, but there is more to be done. That’s why this campaign is now calling on the accountancy profession to step up with their expertise and ability to motivate.”

Claire Bennison, head of ACCA UK, added: “The lockdown may have been lifted, but this Tracker’s results show SME clients are more stressed than before. In the recent discussions we’ve had with ACCA members working with SMEs, we hear loud and clear the pressure their clients are under, clients who are hungry to find solutions to survive.

“Addressing these welfare concerns needs to be part of the policy mix in finding these solutions, and that’s why we’re proud to be supporting #LeaveNoBusinessBehind, an inclusive campaign that aims to redress the balance and where the skills of accountants will be paramount.”



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