Research carried out by Aldermore has found that one in 10 SMEs believe they would not survive disruption to their supply chain.

In addition, 49% of SMEs do not have contingency plans in place should their biggest supplier fail.

Over 59% of SMEs don’t fully understand all the components in their supply chain and 38% have undertaken audits to better understand them. Just 41% of SME decision makers say they know all of the business customers and suppliers in their supply chain, while 9% SMEs say they have no knowledge of any of their business customers whatsoever.

Tim Boag, group managing director, business finance at Aldermore, said: “Our research shows a lack of awareness amongst UK SMEs about their supply chains as well as a lack of preparation to mitigate any disruptions. When you consider how vital SMEs are to the national economy, and the impact this could have across every sector, as an industry we need to do more to ensure SMEs are aware of the importance of their supply chain.

“As a responsible lender to SMEs, we strongly advise they make business continuity plans in case situations arise that could quickly and significantly impact their business.”

The research also highlights that 51% of UK SMEs rely on the EU, whether it’s exporting, importing, or transporting goods and services. However, the research shows that many have not necessarily taken the steps to prepare for the eventualities of Brexit; 31% have consulted the government’s guidance for small businesses post-Brexit and just over a quarter (27%) have secured a GB EORI number.

SMEs that import goods are more likely to have consulted advice from government guides (42%) but have also not taken key steps such as setting up a duty deferment account (75%).

Scenarios that SME business leaders consider likely to have negative impacts on their supply chain in the future are:

• Rising fuel prices (29%)
• VAT changes (27%)
• Late payments from their customers (22%)

Boag added: “Businesses should undertake more contingency planning; especially those who may have close ties to Europe. However, preparation is being made more difficult for SMEs because of the ever-changing political and economic landscape.

“Aldermore continues to work closely with businesses to help them prepare as best they can for changes in economic circumstances and possible supply chain disruptions. As one of the first to sign the British Business Council’s SME Finance Charter, we have pledged to proactively support SMEs through whatever Brexit scenario plays out.”