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Time running short for cash to reach businesses

17 April 2020: ICAEW has used meetings with ministers to press the case for further action to ensure cash reaches SMEs, emphasising the critical importance of a smooth launch to the Coronavirus Job Retention Scheme application process next week.

Iain Wright, ICAEW Director for Business and Industrial Strategy raised these issues in a call on Wednesday with Paul Scully, the Minister for Small Business. Joined by SME members of ICAEW’s Business Committee and Business Reps, Wright stressed that without cash flowing through the real economy, there will be a domino effect of late payments which will put businesses at risk.

To deliver that financial transfusion, it is essential that CBILS (the Coronavirus Business Interruption Loan Scheme) is enabled – or other means found. Wright suggested that the public sector, particularly local authorities, should lead by example by paying its suppliers quickly – something that was not happening consistently.

The Minister also heard of the need for greater clarity around CJRS - specifically that it would be extended beyond the first three months. Attendees were assured that Government would provide more information at the earliest opportunity.

Philippa Kelly, Director of ICAEW’s Technical Strategy Business Group, also raised these issues with Nadhim Zahawi, the Minister for Business and Industry on Thursday. Appearing alongside leaders of other organisations from the business and professional services sector, she updated the Minister on feedback from chartered accountants on the support schemes Government had so far introduced.

Kelly argued that, while CBILS should continue to have an important role, Government needs to recognise that there are many companies, especially SMEs, reluctant to take on unplanned debt during this crisis. To support them, Government should consider additional solutions, potentially including a grant scheme (perhaps using the banking system as the channel for transmission and distribution), equity investment and extended guarantees for smaller loans.

She also reinforced a point made previously by ICAEW that for many businesses across the country, the April payroll is a looming ‘moment of truth’. It is vital that the IT system which HMRC will use to deliver CJRS is capable of handling the enormous demands businesses will subject it to.

Commenting on the meeting, Philippa said: ‘Government and banks have a complex challenge in keeping businesses alive – and there are tensions inherent in all support schemes. Ministers have shown a readiness to listen, and they deserve credit for that, and for the changes they have already introduced to measures like CBILS. But time is getting desperately short, and I think even greater boldness is required.’

Wright added: “Real-time feedback from our members cuts through to Ministers, who really value the feedback they receive from members and ICAEW on how their policy objectives are performing in the real economy. As a result of this engagement, I hope that we will see timely action as a result.”