Many SMEs Are Unwilling To Invest In Their Business and Are Sitting On Cash Stockpiles, Claims ICAEW.

If the reports we hear from governing authorities are correct, then the UK and its small businesses are in for a brighter tomorrow.

After a prolonged period of decline, business confidence is starting to grow in line with the improving economy. Moreover, this is not just a blip in the opinion of the CBI. Its latest economic forecast suggests that the UK economy will continue to “gather momentum” during and beyond the next quarter.

But how do small businesses really feel? Do SME’s share this sense of economic optimism? Well, not if the findings of the Institute of Chartered Accountants in England and Wales are accurate. The ICAEW believes that SMEs are sitting on cash stockpiles and are unwilling to invest in their businesses because they fear for the long-term health of the economy.

According to the latest ICAEW poll, lots of the UK SMEs are hoarding cash surpluses because they don’t yet feel secure enough to invest in infrastructure. The ICAEW survey found that almost two-thirds (62%) of small business owners have a cash surplus this year. Interestingly, that figure has not changed since 2013 when ICAEW last polled its members on this issue. What’s more, more businesses (69%) anticipate having a cash surplus in 2016. Yet, 24% of small businesses were still stubbornly unwilling to invest and were holding 20% or more of their annual turnover in cash.

The ICAEW believes this unwillingness to invest is purely down to a lack of confidence.


More than a third (37%) of SMEs polled said the most important factor in encouraging them to invest would be increasing confidence levels in their prospects. What’s more, more than half (52%) of business owners said they were looking for long-term assurances regarding the UK’s economic direction in the upcoming 2015 General Election before looking too far ahead.

What about the SMEs who were willing to splash the cash? Where are they investing their cash surpluses? Well, 66% were investing in IT, 63% are spending more on training and staff development, whilst 54% are investing in marketing budgets.

So what do these findings tell us? Well, according to Stephen Ibbotson, director of business, ICAEW, it’s simply this:

“The results suggest that businesses have learnt their lessons from the 2007 financial crisis.”

“We have seen business investment slow down, and firms are now sitting on their cash and waiting for the right opportunity, [but] we don’t want to see firms just battening down the hatches, which could stop our recovery in its tracks.”

“The next Government should make it a priority to confirm the new rate of the Annual Investment Allowance as soon as possible. Businesses plan long term and waiting until December’s Autumn Statement isn’t quick enough.”

Is your small business still struggling to keep its head above the water? Have you yet to feel the benefits of the economic upturn? Well, why not speak to the experts at Steven Glicher accountants? Our job, as accountants, is to help small businesses survive and prosper. That’s why we offer an accounting service, specifically tailored for small business needs, where we offer expert help and advice on business planning, raising funding, and investment.

For further information call Steven Glicher accountants on 0161 405 8007 or email

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