Survey finds SMEs divorcing bank managers
By ECM Plus staff
ECM Plus /London/ +++ Bank managers are being ditched and divorced, as accountants, lawyers and finance directors become the most trusted financial advisers, according to new research into small to medium-sized enterprises.
The new research of 1,000 British small to medium-sized companies by Hitachi Capital Invoice Finance looked at SMEs attitudes and how they really felt about who they trust to keep their business on track.
According to the research, Britain’s SMEs are heading back to the days of ‘money under the mattresses’ and loans from family and friends, rather than putting trust in banks.
The majority said they are now 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: “Our faith in the banks is at an all time low” he stressed. “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.”
Added Atkinson: “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.”
According to the research, just 21% said they would now trust advice from their bank manager.