CASH FLOW ISSUES MAY LEAD TO A ‘CLEARING’ OUT OF UAE SMES AS FEATURED ON ARABIAN BUSINESS – May 06, 2020
Many SMEs will be forced to consider outsourcing services and negotiate contracts with landlords.
Cash flow issues may lead to a ‘clearing out’ of UAE SMEs as the effects of the Covid-19 pandemic continue to make themselves felt, according to experts.
In an interview with Scott Cairns, the Managing Director of Dubai-based Creation Business Consultants, said that the “biggest challenge facing SMEs with regards to cash management during the Covid crisis is without a doubt planning.”
“In the ordinary course of business, a 12-week cashflow forecast to manage cash receipts and payments is a standard, accurate planning mechanism. This forecast is always predicated on known payment amounts and dates and anticipated receipts from clients,” he said.
“Uncertainty creeps in when the behaviour of current and potential clients changes unexpectedly. With all companies paying such close attention to their cash position, any delay or deferral in payment from larger organisations will have an exponential knock-on effect as the money trickles down the value chain,” Cairns added.
As the weeks and months of the pandemic continue, Cairns said that cash flow issues will no doubt result in a “clearing out” of the SME marketplace.