Over two-thirds of UK Small and medium sized enterprises (SMEs) (69%) have reported significant pressures on their cash levels. 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.
What is working capital?
Put simply, working capital is the cash your business has readily available to use for day-to-day operations. Put less simply, working capital is whether or not your current assets are enough to cover current liabilities. Working capital is also sometimes referred to as operating liquidity, cash flow and current ratio. 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.
A virus that kills everything
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 cash flow 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.”
SME business owner Anneliese Parnes, CEO of Dynamite Promotions International Ltd, a merchandise specialist for film and entertainment commented: “I’ve been in business for 28 years and have never seen anything like this. Production of our products has stalled in China and a number of my clients in the Film , Entertainment and food industries have pushed their launches and events back 6 months. China will get back up and running because they move fast there but it’s uncertain if, we in the western world, will be able to get back on track as quickly. I’ve been able to unlock cash from my outstanding invoices from MarketFinance to keep the business in motion and give me some breathing space whilst the dust settles on coronavirus disruption”.