SMEs sitting on cash surpluses, say ICAEW
23rd April 2015 | News
Many small businesses in the UK are hoarding cash surpluses because they don’t yet feel secure enough to invest in infrastructure, according to a new poll by the Institute of Chartered Accountants in England and Wales (ICAEW).
The survey found that almost two-thirds (62 per cent) of small business owners have a cash surplus this year.
This figure has not changed since 2013 when ICAEW last polled its members on this issue. In fact more people (69 per cent) anticipate having a cash surplus in 2016.
This reflects a decline in business investment that UK plc has experienced in the last few months. More than a third (37 per cent) of SMEs polled said the most important factor in encouraging them to invest would be increasing confidence levels in their prospects.
Meanwhile, more than half (52 per cent) of business owners said they were looking for long-term assurances regarding the UK’s economic direction in the upcoming 2015 General Election before looking too far ahead.
Almost a quarter (24 per cent) of small businesses are holding 20 per cent or more of their annual turnover in cash.
Of those who will be investing their cash surplus, IT (66 per cent) ranks as the highest priority, while 63 per cent will spend more on training and staff development and 54 per cent will invest in marketing budgets.
Stephen Ibbotson, director of business, ICAEW, said: “The results suggest that businesses have learnt their lessons from the 2007 financial crisis.
“We have seen business investment slow down, and firms are now sitting on their cash and waiting for the right opportunity.
“We don’t want to see firms just battening down the hatches, which could stop our recovery in its tracks.
“The next Government should make it a priority to confirm the new rate of the Annual Investment Allowance as soon as possible.
“Businesses plan long term and waiting until December’s Autumn Statement isn’t quick enough.”