Turning to invoice finance |
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| Written by Paul Williams | |
| Monday, 03 November 2008 | |
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Accountants provide a snapshot of business' experience during the credit crunch.
Research by a leading Invoice and Asset Based Lender, Venture Finance, has provided a revealing picture of the experiences of UK businesses during the credit crunch. The study showed many businesses have been refused credit and are exploring alternative forms of finance such as Asset Based Lending (ABL). It also points out that firms are still not making the most of other funding options that are available, such as the Small Firms Loan Guarantee (SFLG).ABL has enjoyed a 50 per cent leap in popularity in the last twelve months, while interest in bank overdrafts remained static. Accountants stated that ABL is now attractive to more than half (52 per cent) of their business clients compared to only 2 per cent in 2007. Interest in invoice finance has also grown over the same period from 3 per cent to 29 per cent. In comparison, according to the British Banking Association, bank overdraft lending to SMEs has declined by more than half since 1992 to under £10bn. In contrast, the Government-backed SFLG, which can provide up to £250,000 for companies with minimal business assets or a lack of security, is deemed an attractive form of finance for business clients by 66 per cent of UK accountants. Despite the positive feeling around the scheme, of those accountants, none had clients currently using the scheme. In these uncertain economic times more than half (53 per cent) of UK accountants believe that having some kind of Bad Debt Protection in place is important for business in the current economic climate. The loss of liquidity in the debt market has already seen companies face difficulties when trying to refinance, resulting in businesses of all sizes experiencing an increase in late payments and bad debt. 2008 has already seen recognisable high street firms, such as Stead and Simpson, Dolcis, The Works Retail and MK1 fall victim to the credit crunch. However, there remain scores of businesses that have no protection in place, often a result of having misplaced confidence in their customers. Just one in five (20 per cent) of the accountants surveyed had business clients currently looking into Bad Debt Protection services.
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