Cash ow, or liquidity, is the main concern for many businesses. Half of large corporations hold less than 8% of annual turnover in cash. 20 Half of SMEs hold less cash and SMEs have less access to undrawn credit than their larger counterparts.
While the government stepped in to provide support in the form of wage subsidies and the deferral of tax liabilities, for example, and the banking system provided liquidity via payment breaks and lending, the risk remains of liquidity turning to solvency issues. As with all facets of this crisis, the extent will depend on the path and duration of the virus.