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Peer2Peer Finance News | August 18, 2019

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Half of businesses fear credit tightening around Brexit

Half of businesses fear credit tightening around Brexit
Kathryn Gaw

MORE THAN half (53 per cent) of UK business owners fear that their finance options and credit terms will tighten due to Brexit, regardless of whether the UK leaves with a deal or no deal.

According to the new MarketInvoice Business Insights survey, 51 per cent of business owners also anticipate a Brexit-linked decrease in revenue over the next 12 months, amid wider concerns around cashflow and seasonal demand.

1,000 business owners were surveyed last month from companies that employ between 1 and 249 staff.

“Businesses are clearly nervous about the onset and impact of Brexit,” said Jonathan Allan, chief marketing officer at MarketInvoice.

“It’s unchartered territory for many business owners.

Read more: National investment bank needed to boost SME lending

“There will be an immediate adjustment across the economy, no doubt, as we prepare for the new trading environment. Ahead of this, business owners should be seeking advice from their accountants, lenders and bank managers to ensure they are best prepared for all scenarios.

“Meanwhile, it is essential that the new government reassures and encourages these small businesses who are the heartland of the UK economy, that the economic environment will be one they will prosper in.”

Business owners also told MarketInvoice about the impact of seasonal demand. Many businesses said that they plan and prepare almost 15 weeks in advance to meet customer orders ahead of particularly busy periods such as Christmas, New Year, and the start of the school year.

More than a quarter (27.4 per cent) of the revenue earned by UK businesses is driven by seasonal peaks, yet this comes with a number of pressures. 23 per cent of business owners said they were worried about having enough members of staff to fulfil their orders, and 22 per cent are concerned about how they will pay their suppliers.

Read more: SME lending slumps by £200m in July amid Brexit uncertainty

The typical invoice value of goods and services supplied in peak times is £47,203, while business owners wait an average of 80 days to be paid.

“In meeting seasonal demands, businesses are preparing three months in advance and then waiting almost a further three months to get paid,” said Allan.

“It’s worrying to see them so stretched. Regular and significant peaks or troughs in revenue are tough to manage, but it’s possible to smooth the impact. Being prepared and using all the finance tools available is the key to managing seasonal demand.”

Despite the fact that 87 per cent of businesses said that they were prevented from taking on more orders because of cashflow constraints, 54 per cent of business owners admitted that they do not check their cashflow forecast on a regular basis, while 67 per cent aren’t seeking any advice about seasonal spikes in trading. Of the businesses that are taking counsel, the most popular person to turn to for help is their business bank manager.

Read more: ‘Disruptive’ P2P lenders set to take a third of SME lending market