One in three small businesses ‘may struggle to cover costs’ when bills spike in April
One in three small businesses might not be able to cover their costs from the start of April as their energy bill support is slashed by the Government.
New analysis from credit score company Experian suggests that around 30% of the 1.2 million small businesses it analysed will be at “heightened risk” when the support is phased down.
These businesses may not have enough cash to absorb the energy price shock, the company said. At the moment it thinks around 13% of small companies are at heightened risk.
“These figures are very worrying. An added threat to the viability of small businesses is that many are struggling to get paid quickly by their bigger customers,” said Small Business Commissioner Liz Barclay.
“If bigger firms are holding onto cash in case they need it for business critical expenditure, small suppliers can struggle to manage their cashflow and pay their energy and other bills while waiting. If energy bills go up again that could break the business. We need bigger customers to pay smaller suppliers as a priority to give them a fighting chance of survival.”
Experian managing director of information services James McGarva said: “Businesses need to prepare for the April energy shock by building their financial foundations.
“Practise good cash flow management, understand the factors influencing your credit score, and give energy suppliers sufficient notice if you think you’ll struggle to make payments. The future looks daunting, but there are steps that can be taken to improve financial resilience.”