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Supporting Scotland’s SMEs in times of change

joanna-cashmore

By Joanna Cashmore, Head of Sales, Bibby Financial Services.

After a dramatic summer which saw the UK vote to leave the European Union, the expectation amongst many economists was an immediate and severe hit to the economy. The nightmare scenario some had predicted has not occurred, although there are likely to be many tumultuous months ahead. In Scotland, we are seeing a number of issues come to the fore as the Scottish Government undertakes a series of reviews into the business rates regime and the enterprise and skills services to improve productivity and tackle inequality. It is also expected that the First Minister will oppose the UK government in court over the right to trigger Article 50 over the coming months. Political leaders will have to focus on clearing the clouds of uncertainty and providing stability in an increasingly challenging environment for businesses. Scotland’s army of SMEs are also contemplating their future: our research found that 44% are worried about the uncertain economic environment within the UK.

Fortunately, SMEs in Scotland have fared well this last quarter as our Q3 SME Confidence Tracker shows that over a quarter (26%) of SMEs in Scotland has seen an increase in their sales. There has also been good news in the form of a £60 million funding grant from the European Regional Development Fund which will benefit over 20,000 businesses and help to create jobs. Ambitious Scottish firms are the engine of our economy and provide 1.2 million jobs. Simply put, funding these firms is mission critical for the success of the economy.
For many SMEs, it is not just a case of receiving a lump sum or slice of a larger grant. Some businesses need a source of working capital that supports their operations. Our research found that 42% of SMEs in Scotland view customer late payment as a significant risk to their business. This is a chronic issue for many small firms who experience strains on their cash flow. Many small business owners understand these problems all too well: worries about meeting the weekly or monthly payroll, holding back investment decisions or the fear of losing ground to the competition. But SMEs need not let these issues get the better of them.

Many SMEs don’t realise the potential of the cash currently tied up in their outstanding invoices. With the right funding partner, SMEs can be freed of their cash flow concerns and focus on growing their business. For example, we recently funded a small scale roofing business in Livingston that needed a strong balance sheet to take on larger contracts with housebuilders. For most SMEs, funding is not about survival but an integral part of their growth strategies. If sources of credit dry up or political uncertainty continues into next year, we will be there to support small firms every step of the way.

Whilst there are many uncertainties on the horizon, the business owners we speak to on a daily basis understand next year is likely to be one of great change. It’s vital for funders to support businesses for the long-term – even if the future may for now seem unclear. As we look towards 2017, with the right support, there will be many opportunities for businesses to thrive.

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