9th April 2008
UK SMEs are remaining defiant in the face
of the current economic turmoil and will not rein back expansion
plans for the remainder of 2008.
A new survey by the Asset
Based Finance Association (ABFA) found that 74% of companies
are refusing to put growth ambitions
on hold. In fact, around half expect to increase their borrowing
in 2008 with 67% either confident or very confident they
will secure the additional funding to support their plans.
The
research supports the recent government's Annual Small Business
Survey which found that 66% of SMEs were aiming
to grow their business over the next two to three years.
Both reports will be welcomed by the business and enterprise
secretary John Hutton who outlined the government's commitment
to helping small business grow in the new enterprise white
paper during the budget.
However, the news was not all rosy.
Despite their optimism, over 40% of SMEs surveyed said that
the interest rate cut
to 5.25% in February has had little impact on their business.
One third said it had had no impact at all and called for
it to be dropped to at least 5% when the Bank of England
makes its rate announcements on 10th April.
What's more, when
asked about current financial concerns, 37% stated their
relationship was at risk from having to
chase payments. Again this echoes the findings of the small
business survey which has highlighted the growing problem
of late payments in this country.
Maurice Craft, chair of
the Invoice Finance Group which is part of the ABFA, said:
"The majority of the results from the survey are very encouraging
and I'm pleased that
SMEs are planning to go ahead with expansion this year. It
was also interesting to note that a significant proportion
believes that media reports about a recession are over-hyped."
However,
there are still barriers to expansion which need to be
addressed if UK SMEs are going to fulfil their potential.
Of particular interest are the companies that cite managing
late payers and their cashflow function as a hindrance
to
growth. There are options available to companies such as
factoring or invoice discounting which takes the burden
away from chasing late payers and gives the guarantee of
invoices
being paid quickly, allowing the company directors to concentrate
of growing the business.
The survey, which was conducted
at the Institute of Directors finance for SMEs seminar,
also revealed that 63% of SMEs
said they get by in financial matters and use external
sources to fill in the gaps, while 26% claimed to know
more than
their accountant. Just over one in ten companies called
for more free resources from the government to improve
their
financial literacy.
