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July 30, 2020updated 28 Jan 2021 8:11am

Marked differences between UK SMEs and corporate sector in approaches to business planning

By Joe Pickard

There are marked differences in approaches to managing cashflow and business continuity planning between SMEs and the corporate sector, according to the latest edition of the Association of Chartered Certified Accountants (ACCA) UK and The Corporate Finance Network’s (The CFN) SME Recovery Tracker.

For the survey closing 29 July, 86% of accountants in the corporate sector have business plans and financial forecasts in place, with the majority reviewing these regularly on a weekly basis. However, just 35% of SMEs have a business plan, showing that credit terms and business continuity between these two sectors are being handled in very different ways. 

Although many businesses have started opening their doors again, 33% of SMEs are still concerned about opening their businesses with current social distancing rules in place, while the corporate  sectors’ responses show just a fifth are unconfident about returning to work with 47% saying they are very confident.

Since the tracker started, tax deferrals have been a cashflow management choice for SME clients and the results for the last two weeks show 70% have made this decision, with 58% of those responding that they can make their tax liabilities in six months’ time.

The CFN founder Kirsty McGregor said: “The corporate world is recognising the importance of cashflow planning and this is something SMEs can also embrace nowadays with the cloud and digital tools which are available and make this far easier than in previous recessions.

“Couple this with professional advice from accountants, SMEs can work towards creating a more resilient business. We know this is a massive challenge, but help is out there and supporting the accountants in this work is the sole function of our joint campaign across the profession to #LeaveNoBusinessBehind.”

ACCA UK head Claire Bennison said: “In some ways, the different approaches to business planning between SMEs and corporates can be understood, but there are lessons to learn from each other here. Working with digitally adept accountants means SMEs will get the advice they need about how to balance the books, to stabilise their business models and plan ahead. However, sentiment shows that recovery appears to be unpredictable for SMEs – and this is alarming.”

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