Scots firms fear running out of cash, prompting call for more government support

Two fifths of Scottish businesses fear they will run out of cash within the next six months, according to new data – with the “really worrying” figures prompting a call for more government support.

Glasgow-based business development firm Frejz has cited the Business Insights and Conditions Survey (Bics), which found that 39.3 per cent of companies’ cash reserves won’t last beyond half a year.

The survey is run by the Office for National Statistics, and sought the views of more than 1,200 businesses across Scotland between April 6 and 18.

About a fifth of respondents said their reserves would last between one and three months, 16 per cent between four and six months, and 2.7 per cent said they’d be out of money within just a few weeks.

The survey also found that 3.1 per cent of respondents said they had no cash reserves as things stood. Picture: Getty Images/iStockphoto.

Frejz said the statistics show the need for more government support in the form of loans and grants – and called for more to be done in linking new and diversifying businesses with angel investors across the country to help them expand.

Furthermore, the survey found that 20.6 per cent of firms responding said they were unsure about how long their cash reserves would last, and 3.1 per cent said their coffers were empty as things stood. About four in ten said their finances would last beyond the six-month mark.

Finlay Kerr managing director of Frejz, described the figures as “really worrying”, adding that they “show the severity of the cashflow challenges facing so many Scottish businesses”.

Frejz MD Finlay Kerr said the figures 'show the severity of the cashflow challenges facing so many Scottish businesses'. Picture: Ian Potter/PK Perspective.

He added: “While it might feel like things are getting back to normal after the pandemic, it’s clear that for thousands of businesses there are still significant problems to be solved.

“Investors across Scotland are ready and willing to bolster Scotland’s economy as we come out of the pandemic. But their role is to help scale these businesses up, creating jobs and boosting tax receipts in the process.

Long-term view

“That’s why it’s so essential businesses can continue to access grants and loans to get through these rough times and enjoy a far better future at the other side. These are good businesses, and good people who know their trade and their job inside out.”

The Bics figures follow Red Flag Alert data from business rescue and recovery specialist Begbies Traynor, which found that 38,000 businesses in Scotland were showing “significant” financial distress after a jump in the opening months of 2021.

The firm discovered a 45 per cent year-on-year rise in the early signs of such distress, adding that the figures suggested that many firms are only managing to survive thanks to government life support – and seeing an “enormous quantity of financial trouble being stored up” for when support measures come to an end.

Mr Kerr said Scottish businesses now need help “taking the next step, accessing grants and loans, and pitching to investors who can help secure their immediate future and increase potential going forward”.

He added: “Both the UK and Scottish governments have already supplied major support for businesses, but now it’s more important than ever not to cut things off. By injecting new support it won’t only protect jobs and companies now, it will help them grow and bolster the economy going forward too.”

A message from the Editor:

Thank you for reading this article. We're more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers.

If you haven't already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription.