Over a third of small and medium sized businesses are still at risk being hit by the worst of the recession according to a survey of 250 accountants.
The research from Venture Finance revealed that one in three accountants classify the UK business strength as weak or very weak, and that almost two thirds of accountants believe that further business insolvencies are still to come.
Managing Director of Venture Finance, Peter Ewen, said: “Small and medium sized businesses are the engine of economic recovery but the research suggests that they are still struggling to access the finance needed to move from a survival mentality to one of growth.”
He added: “Accountants are telling us that traditional financing methods are not meeting today’s business needs and it is essential small and medium sized businesses understand the full repertoire of funding they can access.”
According to the survey results, the majority of accountants believe that businesses are more focused on stabilising performance as opposed to growth, and that more than a quarter of UK small businesses are shrinking.
Nevertheless, most accountants say there is a solution for firms’ working capital constraints as 53% report that Invoice and Asset Based Lending is now the most effective form of financing to support growth.
Ewen advised: “With ongoing economic uncertainty and an increase in VAT looming, any small or medium sized enterprise that’s planning for growth needs to meet the market from a position of strength. Invoice and Asset Based Lending is a sustainable source of funding that automatically grows in line with a business’s sales ledger, providing the liquidity needed to take advantage of opportunities without putting itself at risk.”