Business News

SMEs failing to collect debts

Filed under: Small business — Alan @ 2:33 am

Almost three out of every four SMEs has been affected by late payments that occurred over the course of 2009, but less than half of them have actually taken any steps to reduce the pressure of their occurrence, according to research from NatWest and its parent company the Royal Bank of Scotland.

The research included numbers from 500 companies, out of which, there are a total of £15.7b of invoices that are over 120 days in arrears.  Banks estimate that 235,000 of SMEs are still wasting their time chasing invoices that are overdue, which is the largest problem for wholesalers; out of which 93% have faced lengthy delays.  Retailers on the other hand have had a better outlook with only 66% faced with late payments.

Additional Barclay’s research that is based on data compiled from 1,000 companies suggests that some SMEs are taking active steps in order to reduce the cash flow pressure by writing off large amounts of debts.  In fact, about 720,000 SMEs wrote off on average about £2,529 in debts in 2009 which is almost double than the amount that was written off in 2008.

The two companies also estimate that fewer than half of all SMEs have actually taken action to combat the debt with only about 11% choosing to hire an in-house credit controller, 8% factoring, and 9% to start using invoice discounting in order to each the pressure from cash flow problems that are caused by owed debts.

Lloyds says it will finance SMEs

Filed under: Loans — Alan @ 7:12 am

The new 2012 SME charter is aimed at addressing the complaints of both medium and small enterprises to help aid them find finance options despite current difficulties over securing finance.

The new commitment also aims at making strides to fulfil pledges made by Government to SMEs that will ease the constraints on SMEs from the recession and make recovery easier.

Lloyds stated that new charter will aid customers from the Royal Bank of Scotland and Lloyds TSB and will inspire discussions with Government ministers that will encourage all SMEs to getting better access to finance in exchange for agreeing to offer fairer pricing to its customer base who have a turnover of at least £15m.

Currently the group has around 18% of the SME market in Wales and England which places it behind the RBS and Barclays in the marketplace. Earlier attempts by the charter to drive up its SME customer base were limited due to the fact only businesses that were able to offer a turnover of under £1m were considered.

As part of the new charter the group will offer much stronger backup for about 300,000 start-ups and will also increase the amount of seminars that it offers from 120 to 200 per year over the next three years.

The aim of this charter is to provide online and personal guidance for SMEs that are just starting up and need aid with sustainability, finance, and employment.

Lloyds is also offering to guarantee that they will meet the finance needs of every reasonable request from customers that are deemed viable.