Working Capital Survey 2021 Global.pdf

2021 WORKING CAPITAL SURVEY:
Uncert!int" but Optimism for Sm!ll to Mid-Sized Businesses

Contents

• About the 2021 survey
• Key findings
• Shared concerns about uncertainty
• The rising cost of liquidity
• Reliance on government programs
• Extended terms and late payments
• Reasons for optimism
• In conclusion

About the 2021 survey

Purpose: to measure financial health and outlooks for small to mid-sized businesses in countries around the world.
Conducted in December 2020 and January 2021.

6,780 respondents located around the globe.

Respondents by country

Respondents were CFOs, CEOs or owners of companies with between 10 and 500 employees.

Key findings

A C2FO worldwide survey of more than 6,700 leaders of small to mid-sized businesses found surprising alignment in terms of access to liquidity, the cost of borrowing, and their outlooks for the future.

Our 2021 Working Capital Survey was conducted in December 2020 and January 2021, focusing entirely on businesses with between 10 and 500 employees. Key findings from the survey include the following:

• Most respondents cited economic instability and uncertainty about customer orders as their biggest challenges, concerns likely fueled by the economic crisis that followed the COVID-19 pandemic.
• An average of 87% of respondents across 16 countries said they have enough liquidity for the next six months.
• Late or extended payment from customers was a growing global concern. An average of 37% of respondents said late payments from customers had increased in 2020. Twenty-eight percent said that at least a quarter of their customers extended payment terms over the past year.
• Government support played a big role in helping businesses endure the pandemic, as 42% of worldwide survey respondents confirmed they received or had applied for funding from government programs.
• The cost of liquidity continues to rise, as 65% of respondents said they paid an APR of more than 8%—a much higher percentage of businesses than in C2FO's previous Working Capital Surveys.
• Despite the challenges of 2020, overall optimism among respondents about their future business prospects was fairly strong—averaging 6.5 on a scale of one to 10.

Shared concerns about uncertainty

In our 2016 and 2017 Working Capital Surveys, businesses had a wide range of concerns, including everything from Brexit to inflation to the strength of the US dollar.

In contrast, most respondents worldwide who took the 2021 survey were aligned on two key challenges: economic instability and worries about future customer orders.

The rising cost of liquidity

Across 16 countries worldwide, the vast majority of survey respondents said they do not lack options in securing liquidity. They cited a wide range of funding sources, including revolving lines of credit, asset-backed loans, factoring, government support, and supply chain finance.

However, the average percentage of borrowing from small to mid-sized businesses (SMBs) in the 2021 survey was down significantly from previous years. In the Working Capital Survey from 2017, the average uptake of funding sources was 46%. For the 2021 survey, it was only 23%.

Reliance on government programs

On average, 42% of SMBs that responded to our survey said they had received or had applied for government funding support, including loans, tax breaks, and money to pay workers.

Countries with a greater percentage of businesses that applied for or received government funding support typically created robust stimulus packages with targeted aid to SMBs—worth at least 10% of the country's GDP, according to a report by the International Monetary Fund.

Extended terms and late payments

Last year, in the face of a widening pandemic, government shutdowns, and economic instability, the response of many companies was to hold on to as much cash as they possibly could.

That strategy was reflected in the number of respondents to our 2021 survey who said more of their customers were paying late, and more of them had extended payment terms. On average, 37% of respondents said their customers often paid their invoices late.

Reasons for optimism

Despite the immense challenges SMBs faced throughout 2020, respondents across the world were mostly optimistic about their prospects for the next quarter. When asked to rate their optimism for their businesses in the next quarter, on a scale of 1 to 10, the average response of respondents was 6.5.

In conclusion

The shared experience of the pandemic and the 2020 economic crisis means that SMBs worldwide have many of the same challenges: concern about economic instability, rising costs of borrowing, and the financial health of their customers.

Access to quick, flexible, low-cost capital and collaborating more closely with their customers are effective ways for SMBs to address the uncertainties moving forward.