SMEs fear impact of Brexit on cashflow
SMALL businesses could struggle to meet their essential running costs due to Brexit-related cashflow problems, new research suggests.
A survey of 335 UK small- and medium-sized enterprises (SMEs) conducted by insurance premium finance company Premium Credit found 45 per cent are very concerned about managing their cashflow in the event of a poor Brexit outcome.
Almost half (47 per cent) said they are also worried about their ability to pay for business insurance.
The Federation of Small Businesses recently warned that UK SMEs are under increasing pressure, partly because of Brexit uncertainty since the vote in 2016, but also because of high business rates and rising employment costs. This has led to business insolvencies reaching a four-year high in the year to the fourth quarter of 2018.
Adam Morghem, strategy and marketing director at Premium Credit, said: “Our research reveals that 61 per cent of SMEs claim to use credit cards, loans and premium finance to pay for their business insurance, but this could increase dramatically if their cashflow is damaged as a result of a no-deal Brexit.
“SMEs could see the goods they buy becoming more expensive, they may have to spend more on stockpiling, and the cost of storing this could also increase. All of this could make it harder to pay for the essentials needed to run their operations – from paying staff salaries to rent and insurance.
“SMEs already face huge challenges and a poor Brexit outcome could make many of these worse.”