Payroll pressure

One in five SMEs ‘will struggle’ to pay wages in April

Debt, money etc
Firms are juggling with rising costs

Rising costs mean more than one in five (22%) small and mid-sized firms in Scotland will struggle to meet their payroll costs in April, it has been claimed.

Rising National Insurance Contributions (NICs), interest rates, energy prices and the minimum wage rates are among the additional costs facing businesses.

The warning emerges in the SME Recovery Tracker from the Association of Chartered Certified Accountants (ACCA) and the Corporate Finance Network (CFN).

The survey, which polls accountancy professionals representing more than 8,000 Scottish businesses on the financial outlook of their SME clients, reveals the added pressures on top of supply chain issues.

On a positive note, Scottish businesses remain optimistic about the opportunities for growth over the next 12 months, with only 7% predicted to run out of cash in the next year, lower than the UK national average of 21%.

Half of Scottish SMEs are actively looking to grow in the first half of 2022, compared to the UK national average of 38%, and almost half (45%) anticipate that they will employ more people in a year’s time.

Susan Love, strategic engagement lead with ACCA Scotland, commented: “While these results paint a more positive picture for Scotland, they also suggest that further challenges lie ahead for our small firms.

“Despite the aspiration to grow and create jobs, the mounting financial pressures placed on Scottish SMEs could tip many over the edge, threatening recent green shoots of recovery.

“As the Scottish Government looks to finalise its spending plans for the coming year, any available headroom should be used to minimise costs on small firms.”

Kirsty McGregor, founder of the CFN, added: “As our research suggests, the hike in National Insurance rates will leave already demoralised small business owners and sole traders in an extremely testing position. UK SMEs have already endured prolonged financial strain with 6% of UK SMEs expressing they are unable to cope.

“While SMEs remain hopeful and the findings demonstrate an appetite for future growth, the onus rests on the government to support SMEs, to provide them with the resources that they need, instead of placing more hurdles for them to overcome.”

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