Inflation and rising energy prices are the main concerns for SMEs as they call on the Chancellor to prioritise tackling inflation at the Autumn Statement.
The latest edition of the ACCA UK and Corporate Finance Network SME Tracker survey, which polls accountancy professionals on the financial outlook of their SME clients, found the top issue SMEs want addressed in the Autumn Statement are measures to tackle inflation (71%).
Over half of SMEs (55%) are also calling for targeted energy support for organisations and businesses, which is yet to be properly detailed. Despite the PM Rishi Sunak acknowledging that ‘difficult decisions’ need to be made, the impact of these decisions remains unclear.
Greater clarity on these decisions is needed, particularly when it comes to energy costs. Based on responses, 79% of SMEs believed the current energy support package for businesses is insufficient. A further 97% of businesses felt that the support did not account for specific energy intensive sectors, with a number citing cutting back on trading hours to address rising energy costs.
Against the backdrop of high inflation, SMEs are struggling to secure working capital due to a number of factors including a rise in interest rates, with 57% reporting borrowing to manage cash flow has been more difficult in the last quarter than over the previous 12 months.
Almost half (47%) said that supplier credit was harder to access, while over a quarter (27%) reported accessing support from HMRC’s Time to Pay scheme is more difficult.
ACCA UK and the CFN warned that as political uncertainty continues, more detailed and targeted support from the new government will be needed to help firms weather the storm.
Lloyd Powell, Head of ACCA Cymru/Wales, warns: ‘In the face of so much turmoil, it can be tempting to take a ‘wait and see’ approach. However, it’s more urgent than ever for the new government to address the issues, such as providing certainty on energy support schemes from April, tackling inflation and improving access to finance for SMEs.
‘With no end to volatility in sight, business owners and accountants need to work even closer together to forecast effectively without a clear plan set by the government at this current time.’
Kirsty McGregor, founder of the Corporate Finance Network, said: ‘This is a worrying time for all SMEs, as profits will inevitably take a dip with a softening in consumer spending. Only resilient businesses with strong working capital and cash reserves will survive, and following the pandemic, cash resources are already stretched.
‘The lending markets are understandably taking a more risk-averse approach to companies with weaker balance sheets, so business owners should take action early and work with advisers who can assist them to strengthen their cash flow situation to ride out this storm.’
