The Courier & Advertiser (Angus and Dundee)
Dwindling cashflow puts Scottish firms at risk
SURVEY: Half of companies would run out of cash within three months without support
Almost half of firms in Scotland say they would run out of cash within three months without access to financial support, according to a new survey.
The Scottish Chambers of Commerce survey of more than 350 companies found that one in eight firms stated they have less than a month before funds will run out.
Half of firms surveyed have already furloughed – or intend to – furlough at least half of their workforce as they respond to the Covid-19 pandemic.
Alison Henderson, chief executive of Dundee and Angus Chamber of Commerce, said cashflow was a serious concern for members.
She said: “Local businesses are coping with loss of revenue against a cost base which has not reduced at a similar pace
“Many of our members have made use of the furlough scheme and are reporting that they would like to see an extension to this and a partial unfurlough option, to safeguard jobs.”
Over three-fifths of firms surveyed believe that there are gaps in support measures offered by government.
Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, said the UK and Scottish governments had moved quickly to address a “catastrophic” decline in cashflow, but that many businesses were saying the support was still not enough.
“If we are to prevent the Scottish economy from being damaged beyond recognition, businesses need cash in the bank now to be fit for when the country is able to start returning to day-to-day activities,” she said.
“Businesses are also looking for an economic recovery plan in Scotland that avoids a restart-stop scenario.”
Companies who applied for the job retention scheme when it opened last Monday started receiving payments earlier this week.
On Monday Chancellor Rishi Sunak introduced the bounce back loan scheme for businesses to borrow up to £50,000, 100% guaranteed by the government and with no payments whatsoever due for the first year.
Ms Henderson said she hoped this new initiative would help businesses which had struggled to access loan funds from commercial lenders when the government was only backing 80% of the loan.
She added: “Many firms are making difficult decisions and some have found it difficult to access the loans funds or simply report an uneasiness in taking on debt that they are unsure if they can service in the future.
“There is also unease about differing guidance on who can be operational and who should remain closed.
“This is raising concerns about competitive disadvantage either domestically or internationally and what that might mean for the economic recovery phase.
“Safeguarding lives must be at the forefront of everything that we do.
“Protecting the workforce while working out what our new normal looks like in economic terms is critical in supporting businesses to survive.”