Following the latest biannual SME Trends Index, businesses have been warned that choosing short-term financial solutions such as credit card and loans can lead to restricted growth, sluggish productivity and a lower turnover.
The latest report surveyed over 450 business owners and directors and found that less than half had managed to secure new funding facilities in the six months to April 2012; whilst those that had relied upon “quick fix” finance solutions.
According to the results of the report, fifty-one percent of respondents rely on business credit cards, and forty-seven on bank overdrafts to keep afloat, whilst only eighteen percent are utilising bespoke financing options such as invoice finance, which effectively releases cash against a business’s sales ledger, despite being a proven and flexible option.
However, according to the results of the report, those businesses who had taken advantage of various forms of finance, experienced a growth in turnover; with a proportion of those using invoice finance reporting a rise in turnover during the six months to April 2012 which was significantly higher – at fifty-seven percent – compared to those who opted to use overdraft facilities (thirty-six percent) and credit cards (thirty-two percent).
For businesses who are concerned about raising finance over the next six months, or who wish to discuss finance options available to them, should visit the experienced, professional and friendly accountancy and finance experts at Milsted Langdon.
As an accountant, Simon Rowe, specialises in tax, business finance and insolvency.