The chief executive of the British Bankers’ Association, Angela Knight has spoken out in defence of high street banks who have been under increasing pressure to make more funds readily available for small and medium sized businesses in the UK.
In an article on the BBC news site Knight reiterates the recent findings of the Bank of England’s Trends in Lending report, whose agents across the UK have reported that demand for loans from SME’s remains weak.
Despite UK banks lending as much as £500m to small businesses there are calls from some SME’s and their representatives to make more funds available.
Knight insists that adequate funds are available and that banks are committed to lend to viable businesses, after all the core business of the bank is to make a return for its customers by lending money to sound borrowers.
The report also suggests that similar to personal debt, many companies are attempting to pay off their debts rather than saddle themselves with more.
The crux of the article is that banks are prepared to offer finance at any level providing that the borrower is viable and can demonstrate the means to repay the money.
Historically in the UK many small businesses have borrowed beyond their means and once saddled with an overdraft facility have simply attempted to increase the borrowing year on year.
This works ok in a normal or booming business climate, but during the financial crisis banks have had to become more aware of their own failings. Constantly increasing business debt to companies that do not have the facilities to reduce the burden is no longer seen as viable business to bankers and rightly so.
It is up to business owners to ensure that they have are viable and not bogged down in debt already before approaching the bank for increased finance.
More so than for many years, business borrowers will need a robust and sustainable plan for repayment of any monies lent to them, before the bank manager is likely to be interested in lending.
It is still early days for the new coalition government to get tough with high street banks, but according to recent research the traditional UK banking sector is still not fulfilling its promise to make more funds available to small businesses.
The Forum of Private Business claims that business owners are finding it more difficult than ever to access finance and indeed many report that they have had overdraft facilities cut, or withdrawn altogether.
In a separate survey the Federation of Small Businesses found that 25% of its respondents are unhappy with the support they are getting from traditional lenders.
Whatever way you look at it the traditional lenders that were rescued from the financial crisis by the previous government are still refusing to play ball with many small business account holders.
This is not always the fault of the banks of course as many SMEs are primarily sales orientated and will take an order at any cost, even when knowing that they may face a long wait for payment from the customer.
For these businesses collecting outstanding accounts is a secondary consideration that will never receive the same attention as obtaining an order.
There are of course other options to conventional banks when looking to finance the growth of a business and among these are Factoring and Invoice Discounting. Companies offering these services operate only in the business sector and should therefore understand your needs better than some of the more traditional lenders.
Factoring and Invoice Discounting are quite often considered to be same thing, this is not actually true and the basic differences are explained here.
Factoring is a process whereby a business sells its outstanding sales invoices or accounts receivable to a third party (Factor) at a discount, in return for immediate payment. This is a continuous process that ensures a regular cash input into the business each month and reduces the need to chase bad debts.
The Factoring company is then responsible for collection of outstanding accounts by providing a full sales invoice administration coupled with credit control and debt collection service, enabling the business owners to concentrate fully on growing the business.
Alternatively, anInvoice Discounting Company will lend your business money using the sales ledger as collateral, releasing immediate cash against sales on a regular basis.
The business owners retain full control of the sales ledger and remain responsible for the collection of outstanding accounts.
This article is intended as a very basic guide to Factoring and Invoice Discounting versus conventional banking in the UK for SME Businesses. Services in this sector are tailored to suit individual companies and anyone looking for alternative funding for their business should seek advice from the experts in this field.
Although ninety percent of the UK adult population believe they are good at handling personal finances, a recent survey by Capital One suggests that their confidence does not always add up.
The research shows that over 50% of credit card holders for instance have not reviewed their monthly payments or balance in the last year.
That figure raises to 82% for people who have overdrafts and 86% for those with personal loans, showing that generally once provision is in place the majority of us do not bother taking steps to control our outgoings.
The study reveals that people are not taking proactive steps to ensure they stay on top of their money – 53% of consumers have never checked their credit rating, despite it being possible to do this for free, and I have to admit to being among them.
And one in five (21%) are unaware that missing a credit repayment can harm their credit score with 25% believing that ignoring a County Court Judgment will not affect their ability to access credit.
Dr Jonathan Henderson, consumer psychologist sees this “as a classic manifestation of the ‘ostrich syndrome’, where people choose an out of sight, out of mind approach to their finances where the less you know, the less there is to worry about. Often people kid themselves they’re in good financial shape but in reality it’s a different story, which is only revealed when bigger problems occur further down the line.”
For years we have campaigned for plain speaking jargon from financial institutions and now Capital One have taken it upon themselves to offer practical financial education advice.
To help consumers improve their financial management Capital One has launched its ‘Credit Made Clearer’ campaign, which features a series of short animated films explaining in an easy to understand format the key area of finance that affect us all.
The campaign is designed to offer helpful money management while also dispelling the myths and confusion that are ingrained in the world of credit and finance through a series of easy to follow and understand animated films.
Commenting on the new campaign Brian Cole, Managing Director, Capital One said: “It is encouraging that consumers believe they are on top of their finances but perhaps they need more support in order to ensure they do not make avoidable mistakes. We hope that our approach, which combines animation and humour, will help more people to think about their finances and take simple positive steps to improve them.”
For more information visit the Capital One ‘Credit made clearer’ campaign and watch the series of video clips with helpful and easy to understand financial tips and information.
Metro Bank will open its first branch in Central London on July 29th.
Britain’s first new high street banking group since the 19th century will open its doors on Thursday promising a return to traditional banking practises from its ultra modern premises.
The flagship branch is the first of twelve planned openings across Greater London during the next two years, with premises in Borehamwood and Fulham Broadway already being fitted out in readiness for October launches.
Despite the promise of traditional banking values, Metro Bank opening hours are straight out of the 21st century and the branches will open at 8am until late and also at weekends.
John Wriglesworth, Moneyexpert and Immediate Financial, comments:
“Metro Bank’s launch is excellent news for the retail financial services sector as well as ordinary consumers. People will be given more choice on the high street and we should see additional competitive deals which will spur other banks and building societies into offering similar – and potentially even better – products. The banking sector – which has been shaken over the last couple of years – will also take heart from a new entrant with ambitious plans for the future.”
One in every thirty six one pound coins in circulation are fakes we are being told by the Royal Mint, who have been prompted to start a campaign showing the UK public how to spot the odd ones out.
Almost two million of the counterfeit coins were returned to the Royal Mint during this last financial year, double the number destroyed in the previous year.
In the first three months of this financial year 187,000 fake coins have already been taken out of circulation.
That is a staggering statistic and bearing in mind that once accepted in good faith the fake coins are rendered worthless, it is good reason to be more careful when checking the change given when making any purchases.
Attempting to pass on a coin that you have identified as a counterfeit is an offence and could lead to prosecution. Experts consider that as many as 30 million counterfeit one pound coins exist in the UK today.
