Thursday 22nd November, 2012

Bank Managers are being ditched and divorced, as Accountants, Lawyers and Finance Directors become the most trusted financial advisers according to 80% of SMEs and a lack of credit and cash flow is still a worry for around 43% of SMEs.

The economic climate remains choppy and SMEs need funding in order to survive and grow.  New research of 1,000 UK SMEs unearthed attitudes on how they really feel about the state of funding available, and most importantly who they trust to keep their business on track.

The research, commissioned to launch Hitachi Capital’s new simplified Inspired Cashflow offer, signals that the nation’s SMEs are heading back to the days of loans from family and friends, rather than putting trust into their bank manager to look after their finances. Only 21% said they would trust advice from their bank manager, compared with the majority seeking help from their Accountant (43%) which came out top, then their Lawyer or Independent Financial Adviser.

John Atkinson, Head of Commercial Business at Inspired Cashflow, part of Hitachi Capital Invoice Finance, said: “We are in a very different business environment at the moment, not only are economic times tough, but our faith in the banks is at an all time low. This has created a difficult situation for businesses as companies don’t know where to turn, and because 43% of SMEs surveyed admit that cash flow is either a current problem or has been in the past year for them, it’s hard to hear that one fifth of those admit that their banks weren’t any help in solving this issue.

“It seems many SMEs don’t even know the name of their own bank manager, and since a lot of business is done online, there is no personal attachment or face-to-face interaction like there used to be. Complicated online processes and fees from banks and service providers can lead to companies making the wrong choices and the misunderstanding of how services in the market work, such as invoice finance. It’s scary to see that nearly half of SMEs are sourcing finance from secured loans (20%), bank overdrafts (17%) and even credit cards (12%) – all of which are expensive methods of finance for SMEs -– instead of opting for cost effective and simple means. And what’s even more worrying is that other sources including, friends, family, life savings and selling assets were used by nearly 28% to increase finance and cash flow for their business.