A third of small to medium-sized businesses in the UK have never changed their finance provider, according to new research.
Reasons cited for not changing financial provider include a lack of time to review their financial strategy, being unsure of their optionsand fear of being penalised by their current provider.
The findings come from the Close Brothers Business Barometer, a quarterly survey that canvasses the opinion of SME owners and senior management across the UK.
CEO of Close Brothers Invoice Finance, David Thomson, said: “It’s worrying that so many SMEs don’t appear to be regularly appraising their business finance, which is arguably a little complacent.
“Cash flow is the life blood of any healthy business and so it stands to reason that financial strategy should be reviewed regularly throughout the lifecycle of the business to ensure that the funding in place still meets current business requirements.
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“Without taking the time to properly assess their situation and understand the full range of financial options available to them, SME owners and managers could miss out on opportunities for growth as the funding they have in place may not be fit for purpose.”
Of those SMEs that have switched providers in the last 10 years, almost a third have moved from a high street bank to an alternative lender.
And of that number, two fifths believe alternative sources of financeare less expensive than traditional lending, while 37% say they changed because alternative lenders offer moreflexibility.
Mr Thomson continued: “Invoice finance is one such type of alternative finance and according to recent findings by theAsset Based Finance Association (ABFA)*, its use amongst businesses is at an all-time high.However our research shows that there continues to be a lack of awareness amongst small and medium-sized businesses, with a third of those we talked to admitting they don’t understand how invoice finance works.
“We are working with businesses of all shapes and sizes across the UK to raise awareness of the benefits of this form of funding, in addition to ABL (asset based lending). Our team has extensive experience of working with a wide range of industries, enabling them to tailor appropriate packages to suit individual business needs.”