Working capital, financing top MSME concerns amid pandemic

MANILA, Philippines — Working capital management and the need for financing have been cited as among top concerns of micro, small and medium enterprises (MSMEs) as the coronavirus disease 2019 or COVID-19 outbreak continues, according to a survey by PwC Philippines.

Speaking at the Management Association of the Philippines’ webinar, Mary Jade Roxas-Divinagracia, managing partner for deals and corporate finance at Isla Lipana & Co. or PwC Philippines said the COVID-19 Business Impact Survey showed 44 percent of MSMEs cited working capital management as their top concern during the ongoing pandemic.

She said 30 percent of large companies also said they considered working capital management as a pressing concern.

The survey covered 350 respondents, of which 59 percent are MSMEs.

Divinagracia said a larger percentage of MSMEs also cited financing or capital as a pressing need during the COVID-19 crisis.

In particular, 39 percent of MSMEs said they are in need of financing as opposed to 29 percent of large companies.

The survey also showed 43 percent of MSMEs anticipate liquidity problems after the enhanced community quarantine is lifted, while 31 percent of large companies cited the same.

To preserve cash and sustain the business, Divinagracia said 48 percent of MSMEs are stretching their payables.

“Inevitably, some businesses have to resort to reduce manpower or compensation at this time,” she said.

She said 75 percent of MSMEs consider the health and safety of employees as their main concern post — enhanced community quarantine.

She said this is consistent with the results of large companies.

She also said most or 54 percent of MSMEs plan to prioritize flexible working arrangements when the enhanced community quarantine period ends.

MSMEs are likewise looking to prioritize digital transformation and digital upskilling of people.

With operations of MSMEs affected by the lockdown, Roberto Claudio, past president of the Philippine Retailers Association (PRA) and chairman of Quorum Group (Toby’s Group) said the PRA has recommended to government that all MSMEs, even those providing non-essential products, be allowed to operate during the enhanced community quarantine as long as all transactions are done online.

“By allowing them to go digital, even if they are not essential, they can at least pay for their people,” he said.

Areas like Metro Manila, Central Luzon (except Aurora province), Calabarzon, Pangasinan, Benguet, Iloilo including Iloilo City, Cebu including Cebu City, Bacolod City, Davao City, Albay, and Zamboanga City are under enhanced community quarantine until May 15.