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The financial services sector is shunning traditional forms of funding in favour
of alternatives such as invoice finance, according to Bibby Financial Services (BFS).
According to the results of the annual BFS survey, 78% of accountants and
brokers have recommended invoice finance to their SME clients as a means of
funding their business in the past year, a 20% increase on 2005.
But despite the popularity of invoice finance among finance professionals, 84%
felt that their SME clients were struggling to break with tradition and opt for
an invoice finance solution over a bank loan or overdraft facility.
Bibby argues that the barrier between finance professionals and their clients
when it comes to understanding the benefits of invoice finance lies in SMEs
perceptions of it as a credible form of funding.
One in three still believe that invoice finance is a ‘last chance saloon’ for
businesses in financial difficulty, despite the increasing number of UK owners
and managers who use it to fund their business.
A further 28% felt that other forms of finance were more tried and trusted,
while 24% thought that the fees charged for the service were too high, unaware
of the competitive rates now afforded to SMEs by many invoice financiers.
David Robertson, chief executive, Bibby Financial Services, commented: “While
it’s undoubtedly good news for invoice financiers that finance services
professionals are becoming more and more comfortable in recommending alternative
forms of funding to their clients, it seems that there is some way to go in
getting SMEs to step out of their comfort zone and reap the benefits new finance
solutions can bring.
“Interestingly, over half of accountants and brokers surveyed felt that owners
and managers simply lacked understanding of how invoice finance can benefit
their business, keeping in place the outdated perceptions about only businesses
on the brink of disaster using it and high fees, which is simply not the case.
“The finance community has come a long way in embracing alternative forms of
funding, however, we need to continue working in partnership to ensure that SMEs
fully understand the options open to them and that ultimately, they secure the
right funding solution they need to drive their business forward.”
Source:
Credit
Control Journal
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