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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 figures.
However, despite the popularity of invoice finance among finance professionals,
84% felt that their small to medium sized clients were struggling to break with
tradition and opt for an invoice finance solution over a bank loan or overdraft
facility.
It seems 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 (35%) 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 nearly a quarter (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, said: “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 (56%) 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benefit their business, keeping in place the outdated perceptions about only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:
RedAlert
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