Business concepts are evolving. Technology has its hold over the business world, with all sectors seeing their productivity and security changed for the better. As a result, traditional techniques have become obsolete, with manual processes replaced with faster and more efficient modern procedures.
Financial services, in particular, have seen their landscape change shape. Financial technology (“fintech”) has introduced online banking, mobile banking and all variants of automation. If businesses are to connect with the digital customer, they must also embrace digital methods. Of course, for traditional businesses, this can cost too much, and this is where alternative financiers are important.
Bank loans were once the most popular -and only- option for business owners searching for extra cash. As new technology has surfaced, so has alternatives, and business owners are now spoilt for choice. Analysis by commercial finance provider Wesleyan Bank recently found that 59 percent of SMEs have pursued external funding – including routes such as crowdfunding and invoice finance – compared to a mere 30 percent in 2016.
The real problem with high street loans is the damage that is inflicted on business finances, with the build-up of interest giving providing business owners with a stronger financial present, but at the price of their financial future. While these new alternative finance platforms offer more flexibility, business owners should still heed caution in merely resorting to borrowing money from investors or sacrificing business shares. At the Credit Protection Association, our debt recovery and credit management services focus on improving our members’ finances and securing their financial future.
A quarter, 27 percent, stated that they now “regularly” turn to external finance, up from 20 percent two years ago.
The figures came from Wesleyan Bank’s SME Heroes or Zeroes 2018 report, showing that despite Brexit being on the horizon, 65 percent of firms anticipate growth of up to 40 percent over the next two years.
The report reveals that 54 per cent are feeling “more confident” about their firm’s prospects one year on and just 11 per cent are “concerned” about the potential impact of Brexit.
“The UK’s economic outlook is often clouded by negativity, but this research highlights that SMEs are performing strongly and have built solid foundations to prosper, both pre and post Brexit,” Paul Slapa, head of direct sales at Wesleyan Bank, said.
“Unless there is a material impact on their business today, there is no reason why SMEs should put on hold their investment plans to sustain and maximise growth.