SME Revenue Plummets 28% Amid COVID-19 Downturn
New research has thrown light on the ongoing and apparently worsening impact of the COVID-19 pandemic on smaller UK businesses.
Xero’s analysis revealed a 26% decrease in small and medium-sized enterprises (SMEs) during the month of April, and a 28% increase during May, compared with figures from the previous year.
It also found that invoices are taking longer to be paid, with the average waiting time for SMEs rising from 30.7 days to 38.5 days since February – an increase of a little over a week.
The platform also identified a decrease in small businesses’ employment rates. In an analysis of payroll data, it emerged that small business employment fell by 6% between May and March despite the influence of the government’s coronavirus job retention scheme, which is set to be scaled back in the coming months.
Hardest hit were small businesses in the hospitality sector, which shed 11% of jobs in April and a further 3% in May. Revenue-wise, the sector saw an average decrease of around 57% in April and 53% in May. The next closest sector was arts and recreation, which saw losses of 41% for both months.
These findings form the basis of Xero’s Roadmap to Recovery manifesto, which calls on the government to provide extra support to help small businesses rebuild in the wake of the pandemic.
“The pandemic has had a devastating impact on business,” said Gary Turner, UK managing director of Xero. “As our customer data shows, jobs are being lost and the creation of new ones will depend on how quickly the economy can be rebooted.”