UK manufacturers are facing a precarious future according to insights from fintech business lender MarketFinance.
Over two thirds (68%) reported their order books have halved in the last 30 days. To compound matters, the majority (67%) have less than £50,000 cash and without any support will run out of money before the end of April.
Over half (51%) of manufacturers are interested in accessing funding through the Coronavirus Business Interruption Loan Scheme (CBILS, which offers up to £5 million interest free for the first year, over six years) to shore up their business for the medium to long term. A third (33%) of manufacturers are seeking an average loan of £62,500, equivalent to £417 million for the sector. Just 4% were seeking a £10,000 loan, one in ten (11%) need £17,500 and a further 3% need £300,000. If they are unsuccessful in securing a business loan, most reported they would turn to invoice finance (finance on outstanding invoice payments owed to them).
With March revenues halved and near-term prospects looking uncertain, 64% have revised down their order books for 2020 by 40-50%. They are seeking short-term solutions to remedy finance concerns. They ranked a larger overdraft facility as first preference before seeking a business credit card and in third place, using invoice finance as a means to inject working capital into the business.
Anil Stocker, CEO at MarketFinance, said: “Manufacturers are in urgent need of support. All the industry indicators show orders are down and unlikely to recover much this year. They have been hit hard by the COVID-19 outbreak. A number of firms have had to shut their doors and some that remain open are pivoting to make products that support the national effort to contain the spread of the virus. It’s imperative that we back these businesses.”
Just over a third (36%) of manufacturers are turning to their accountants for advice on what to do next before consulting their friends and family (19%) and seeking advice from their bank manager (18%). Business owners feel their accountants are the most accessible given the remote working environment.
Stocker added: “Manufacturers turning to their accountants for support as their trusted advisors during this period of uncertainty. These accountants have the tools and know-how to support them in revising their cashflow forecasts, applying for loans and making contingency plans. It’s important for everyone – bank managers, accountants, financial advisors – to come together to support manufacturers. Business advisors will need to bring all their energy, skills and experience to save British manufacturers across the country.”