Almost half of SMEs say Brexit will have a “very significant” impact on their ability to manage cash flow
Premium Credit has warned that a poor Brexit outcome could see many SMEs struggling to pay for insurance and subsequently going without it.
And in some cases, they could be breaking the law by not having the compulsory cover that they need.
This is according to research by Biba backed by the premium finance provider, which commissioned a survey of 335 UK SMEs.
It said that a poor Brexit outcome could create “major cash flow problems” with 45% of SMEs “very concerned” about managing it.
Only 21% were unworried, with 34% claiming to be “fairly concerned”.
No deal Brexit
Adam Morghem, strategy and marketing director at Premium Credit explained: “Our research reveals that 61% of SMEs claim to use credit cards, loans and premium finance to pay for their insurance, but this could increase dramatically if their cash flow is damaged as a result of a No deal Brexit.
“SMEs could see the goods they buy becoming more expensive, they may have to spend more on stockpiling, and the cost of storing this could also increase. All of this could make it harder to pay for the essentials needed to run their operations – from paying staff salaries, rent and insurance.”
Premium Credit lends around £3bn a year to support UK businesses.
This premium finance option allows SMEs to spread the cost of insurance instead of paying it all one go.
Morghem added: “SMEs already face huge challenges and a poor Brexit outcome could make many of these worse. If this happens, there could be growing demand for premium finance.”
But he warned that SMEs could see these goods becoming more expensive and they may have to spend more on stockpiling, with the cost of storing them also increasing.
“All of this could make it harder to pay for the essentials needed to run their operations – from paying staff salaries, rent and insurance.
“This can be a very cost-effective way for SMEs to spread the cost of their insurance, and our research shows that of those businesses that have heard of it, 62% have used it for this purpose,” he said.
Morghem highlighted that a key challenge is that the majority of SMEs have not heard of premium finance.
He said that the premium finance industry, along with insurers and brokers, need to do more to highlight its benefits to clients.
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