While some sectors have fared worse than others, in general, the formal mid-market SME sector is proving more resilient than informal and smaller SMEs due to better liquidity and easier access to funding.
Regardless of their situation, every business requires cash to continue operations, pay staff and purchase new stock, or see them through prolonged business interruptions.
Despite facing economic headwinds going into the Covid-19 crisis, established businesses are generally sitting with good cash flow and have equity.
Sean Jackson, Investec Business Cash Solutions head
Accordingly, continued access to funding remains vital to SME sustainability, while businesses with surplus cash or existing deposits require greater flexibility as business owners navigate an uncertain marketplace amid supply-side and demand-side challenges.
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How to maximise surplus funds
Financial services providers need to offer competitive rates on deposits, without sacrificing accessibility to secure deposits in this environment.
“In what is a major change in SME behaviour since the pandemic hit, clients generally moved from six-month products to instant access or call accounts, with many looking to benefit should rates start rising again from current all-time lows.”
Preparing for an uncertain future
And until a vaccine emerges, SMEs may require capital to invest in digital channel enablement and delivery services to create a relevant and sustainable business model as consumer purchasing habits shift in response to the pandemic.
According to Jackson, finding the appropriate business cash solution to address these requirements requires direct business engagement to determine the unique needs of the business.
“Having appropriate and timely conversations is vital, especially as time to fund is extremely long at present. Business owners should look at all options to ensure they maximise their return on any cash, taking into consideration the market conditions and their liquidity requirements to ensure they are able to navigate this crisis as best as possible.”
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