Just over a quarter (27%) of business owners have cut their spending due to the coronavirus pandemic, according to a new social media survey. But the study from the Personal Finance Society also found that more than a third (40%) of businesses haven’t adapted or changed their financial plans at all.
Where does your business stand?
The impact of coronavirus on UK businesses
We all have our own stories on how coronavirus has affected our lives, both personally and professionally, but for an overall, high level view, the Office for National Statistics (ONS) pulled together the following information on September 10th:
- Of those businesses that avoided a complete close down, just over a third ( 36%) of the workforce were working remotely instead of at their normal place of work.
- Across all industries, 6% of the workforce that were still on partial or furlough leave returned from leave in the last two weeks.
- The accommodation and food service activities industry reported the highest percentage of businesses reporting their risk of insolvency was severe to moderate, at 23%, compared with 11% across all industries.
- The arts, entertainment and recreation industry reported the largest percentage of businesses indicating that operating costs had exceeded turnover, at 40%.
- The arts, entertainment and recreation industry had the highest percentage of businesses reporting they had issued credit notes or vouchers to customers for postponed or cancelled bookings, services or events, at 52%.
- Of businesses not permanently stopped trading, 53% reported having outstanding invoice payments due to them.
Given the impact of the virus, why haven’t more businesses adapted their financial plans?
Financial advisers reveal impact of Covid-19 on business financial planning
Four out of 10 financial advisers have reported their clients did not have to adapt or change their financial plans due to Covid-19.
A social media survey of 45 Personal Finance Society members in September showed only 5 per cent of advisers had a client who struggled with loan repayments as a result of the economic impact of Covid-19.
Roughly a quarter (27 per cent) of those polled revealed their clients had reduced the amount they are saving and spending due to concerns about the impact of Covid-19 on their finances and three out of 10 (29 per cent) stated their clients were saving more cash during lockdown.
Keith Richards, chief executive of the Personal Finance Society, said: “Today (7 October) is World Financial Planning Day and the fact four out of 10 advisers have yet to see the need to adapt or change client plans is testament to the value and importance of professional support.
“We still find ourselves very much in the midst of this pandemic, with more financial impacts to come for many individuals. This month spells the end of the government’s furlough scheme, which has already resulted in businesses consulting on redundancies and some will struggle to survive until Christmas.
“While we welcomed the Chancellor’ Winter package and the measures to protect viable jobs, many economists agree they have not come soon enough, nor do they go far enough to protect the many millions who will be hurting now. Unfortunately, this means we can only expect personal finances to be hit harder and for unemployment to continue to increase.
“The value of professional financial advice could not be overestimated during this period, nor in the months ahead. The financial situation of many could be bleak in the months to come and we have already alerted the FCA and The Pensions Regulator to a spike in requests for pension transfer advice.
“We have also urged members to remain vigilant and continue to reach out to clients to ensure they are swiftly update on any change in financial circumstances so they can help them throughout this crisis.”
