South East: 29% of firms complacent about their finances, says Close Brothers
29% of small to medium-sized businesses in the South East have never changed their finance provider, according to new research.
Reasons cited for companies not changing financial provider include a lack of time to review their financial strategy, being unsure of their options and fear of being penalised by their current provider.
The findings come from the Close Brothers Business Barometer, a quarterly survey that canvasses the opinion of SME owners and senior management across the UK.
Michael Cox, regional sales director for Close Brothers Invoice Finance in the South East, said: “It’s worrying that so many SMEs don’t appear to be regularly appraising their business finance, which is arguably a little complacent.
“Cashflow is the life blood of any healthy business and so it stands to reason that financial strategy should be reviewed regularly throughout the lifecycle of the business to ensure that the funding in place still meets current business requirements.
“Without taking the time to properly assess their situation and understand the full range of financial options available to them, SME owners and managers could miss out on opportunities for growth as the funding they have in place may not be fit for purpose.”
Of those SMEs in the South East that have switched providers in the past 10 years, 27% have moved from a high street bank to an alternative lender.
And of that number, 44% say they changed because alternative lenders offer more flexibility while almost a third believe alternative sources of finance are less expensive than traditional lending.
Cox continued: “Invoice finance is one such type of alternative finance and, according to recent findings by the Asset Based Finance Association (ABFA), its use among businesses is at an all-time high. However our research shows that there continues to be a lack of awareness among small and medium-sized businesses in the region, with over a third of those we talked to admitting they don’t understand how invoice finance works.
“We are working with businesses of all shapes and sizes to raise awareness of the benefits of this form of funding in addition to asset-based lending.”