News

September 28, 2012

SMEs turn their backs on bank managers

Small business owners are increasingly turning their backs on their bank manager when it comes to business advice — instead choosing to consult other trusted advisers such as accountants.

These are the findings of new research conducted among 1,000 UK SMEs by Hitachi Capital Invoice Finance. Only 21% of respondents said they would trust advice from their bank manager, compared with those seeking help from their accountant (43%), followed by 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. 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."

The findings suggest that lack of funding from banks is damaging relationships between banks and their business customers. It shows that credit and cashflow is a worry for 43% of SMEs, leaving many to find finance elsewhere.

John Atkinson said: "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 cashflow for their business."