Firms need clarity on how to access government help to beat the virus
Many UK businesses are now managing significant disruption due to the coronavirus pandemic. From travel and supply chain restrictions to staff absences, and event or booking cancellations, we’re hearing more and more about their experiences and challenges.
And by some distance, the biggest challenge for firms at a moment like this is around cash flow – the single most important indicator of a business’s overall health. Some firms face a perfect storm of increased costs, reduced demand and events beyond their control that mean they will struggle to meet their obligations. It won’t just be marginal businesses that will suffer. Many well-run firms face significant disruption in the weeks and months ahead.
Even before the coronavirus impact began, the British Chambers of Commerce’s Quarterly Economic Survey, the biggest private business survey in the UK, was showing cash flow on a downward trend, weak by historic standards. Unprecedented Brexit uncertainty, high upfront costs,
‘Companies want practical answers. How will my bank support me? Who do I ask about business rates bills?’
global economic headwinds and payment difficulties have left many firms cash-poor. Coronavirus threatens to exacerbate this further.
The risks will be particularly acute for smaller firms, which may not have built up the reserves of their larger counterparts and may struggle to make ends meet. Just this week, we’ve heard from a firm in the Wirral facing a 70pc reduction in sales, and from small retailers struggling with their supply chains. Some manufacturers in Lancashire have seen their export shipments halve and are struggling to find the containers they need to ship their goods.
Against this backdrop, the coordinated package of support announced this week by the Treasury and the Bank of England has come at the right time. The Bank’s moves to cut interest rates and to provide lending guarantees intended to support SMES sent the right signal at a delicate moment. In the Budget, the Chancellor responded to many of our proposals for immediate support, such as an extension of HMRC’S Time to Pay scheme, breathing room on business rates for some firms and a promise to reimburse smaller companies for statutory sick pay.
While we believe that some of these measures need to be expanded further, to include more and larger companies, they have the potential to provide immediate support for many firms facing a cash crunch.
We are now urging ministers to ensure that these welcome announcements make a real difference for businesses on the ground.
In fraught circumstances, timeliness and detail matter most to businesses.
Companies want practical answers to real-world questions. How will my bank support me over the coming weeks? How long will it take to receive sick pay reimbursements? What do I need to do to access the £3,000 grant for small businesses? Who do I ask when I have questions about my business rates bill?
Government and financial institutions must now provide clarity on how firms can access new support as quickly as possible. And it’s not just government that needs to act. Businesses need to do their part, too, starting by making timely payments to their own suppliers in order to keep cash flowing.
Consumers can help, too, by supporting their local business communities as much as possible while adhering to official advice to keep themselves safe. Many well-loved local firms are at the front line of the cash flow challenge and will need community support in the days and weeks ahead.
We are facing a constantly evolving and unexpected public health challenge, which is already testing many businesses of all sizes, and in many regions and nations of the UK.
So many businesses are already reacting in innovative ways and proving their resilience at this time of uncertainty. They will want to see active engagement and open dialogue with government over the coming weeks and months, to ensure that support gets to where it is needed most.
After all, cash is still king for all businesses – no matter how big or small.
Dr Adam Marshall is director general of the British Chambers of Commerce (@ BCCADAM)