Scots small businesses 'warming up'
Virgin Money UK today (Tuesday, December 10) announced the results of its Q3 2019 SME Health Check Index – research designed to ‘take the temperature’ of the small and medium-sized enterprise community across different regions of the UK.
"Scotland’s SMEs performed well, despite an intense political climate and uncertain economic conditions over the period," said Gavin Opperman, group customer banking diretor at Virgin Money.
The Index score for the region increased by 10.7 points across the quarter, reaching 51.5.
The report from Virgin Money UK, owner of Clydesdale and Yorkshire Bank, measures SMEs’ performance across eight indicators; business costs, GDP, employment, revenue, capacity, confidence, lending and net business creation.
The improvement was driven by increases across several indicators.
The revenue indicator rebounded from a record low in Q2 to the highest level since 2015, while the share of Scottish SMEs operating below full capacity also fell to the lowest level since Q4 2015.
"These results are an encouraging signal for the SME community in Scotland, following a highly challenging start to the year," Mr Opperman added.
"There were, however, some concerning trends around the labour market. The number of people in employment in Scotland in Q3 was nearly 43,000 below the level in Q2. This contributed to a 0.8% year-on-year decline in employment, and an 18-point fall in the employment indicator from 54 to 36.
The performance of the UK as a whole was also encouraging, with a 7.5 point increase recorded from the second quarter, bringing the score to 49.0 in Q3.
The research included a special report on late payments, revealing that 3 in 4 SMEs (74%) have experienced late payments from customers over the last 12 months.
The survey of 1,000 senior SME decision-makers also shows 13% of payments in the last year were received later than the agreed payment terms, causing disruption for businesses, including needing to postpone investment and causing difficulty in paying staff. The report also shows the knock-on effect of late payments, with 88% of SMEs who have paid a supplier late saying that a late payment due from a customer was a contributing factor.