The impact of COVID-19 is taking a heavy toll on UK businesses as the majority of firms face major cash flow issues, according to the first results of the BCC Coronavirus Business Impact Tracker.
The tracker from the BCC (British Chambers of Commerce), identified a sharp and significant fall in domestic and overseas revenue for UK businesses.
62% of firms have three months’ cash in reserve or less and 44% of respondents expect furlough at least half of their workforce in the next week.
The BBC said its new tracker will serve as a “barometer of business’ response to the government’s measures and changes to business’ working practices over the next few months”.
It will also track how quickly new government interventions, introduced to deal with the real-world impact of this crisis, are getting to the businesses at the front line.
The first set of polling was conducted from 25-27 March with responses from over 600 businesses. It revealed that a majority of firms reported a significant decrease in their revenue from both the UK and overseas.
Concerns with cash flow
Of most concern is the impact on business’s cash flow, an important indicator of overall economic health.
18% reported less than a month’s worth of cash in reserve, while 44% reported only 1 to 3 months’ worth of cash in reserve.
Only 6% of respondents reported over 12 months’ worth of cash in reserve.
Following the government’s pledge to cover 80% of a furloughed employee’s salary up to £2,500 a month, 32% of respondents said that they were planning to furlough between 75 to 100% of their workforce over the next week.
More than a quarter of firms (26%) were not due to use the scheme in the next week.
Changing work practices
A majority of businesses have embraced the changes in working culture, with two thirds of respondents (66%) using remote working and half using videoconferencing.
However, 18% of businesses had closed operations temporarily and, although no respondents had yet closed business operations permanently, both figures are expected to rise over the coming weeks and months.
Awareness of government support schemes
Most businesses reported awareness of the government’s recent support schemes to help mitigate the impact of coronavirus.
More thana half of firms knew details of the business rates holiday for retail, hospitality and leisure sector; the Coronavirus Business Interruption Loan Scheme and the Statutory Sick Pay Refund (61%, 59% & 57% respectively).
The percentage of firms actively in receipt of this support was low but this is expected to rise in the coming weeks following the government’s official launch of the Coronavirus Business Interruption Loan Scheme and Job Retention Scheme on Monday 23 March.