Do companies need to watch their finances more closely?

A new survey of small businesses has revealed that a third have never considered changing their finance provider, despite the potential benefits of doing so.


The Close Brothers Business Barometer is conducted quarterly to gain opinions of small business owners and managers in the UK.


In the survey businesses cited that they lacked the time to review their financial strategy, that they were unsure of their options, and that they feared facing penalties from their existing providers.


This suggests that some businesses are complacent when it comes to their finances and this can be viewed as a cause for concern.


Cash flow management is essential for a business to maintain a healthy financial situation, which is why regular reviews of the set-up are recommended.


That way it is possible to ensure that the funding that is in place is capable of meeting the business requirements for which it exists.


Failing to regularly monitor the situation could result in missed opportunities, which can be especially problematic for companies in highly competitive marketplaces.


Options for growth may be missed while the funding may no longer be serving its purpose, in which case repayments could be eating into potential profits.


While business restructuring may solve some of these issues, companies with serious cash flow problems could face the threat of insolvency.


The survey found that of those SMEs who have switched in the past ten years, nearly a third had opted for an alternative lender, rather than a high street bank.


Two-fifths suggested that this form of finance was less expensive than more traditional lending means while 37% said opting for an alternative lender provided greater flexibility.


According to the Asset Based Finance Association, the use of alternative finance is at a record high, although some businesses may still be missing out.


Highlighting potential areas for improved financial management may provide a pathway to long-term business success.


However, this does require finances to be closely monitored to ensure that any opportunity can be seized upon.


By Phil Smith


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