UK SMEs ‘neglected by banking sector’
During the most unstable economic landscape the UK has experienced in decades, the latest research unveils the extent of neglect from the banking sector towards SMEs (Small-medium sized enterprises).
Independent research carried out across 500 UK SMEs found that 72% of respondents felt their banking partners are providing limited support during the current crisis. At a time when soaring trading costs and inflation continue to threaten SME survival rates, business owners demand more from their banking partners and will be forced to seek fresh support from elsewhere to ensure they stay afloat.
Lynne Darcey Quigley CEO and founder of Know-it comments: “SMEs are the fabric of our economy and require as much support as possible to avoid catastrophe. Following the opening up of the country following the pandemic, SMEs came out of the proverbial frying pan and straight into the fire of the current economic turmoil.”
The lack of support centres around international payments and confidence of expansion. Furthermore, 73% of respondents said they struggle to secure a meeting with their bank or financial manager at any given time.
Lynne continues: “Such an overwhelming negative sentiment towards banking partners from SME owners should not occur ever, but especially during an economic crisis. The banking sector’s short-sighted approach to prioritising the needs of larger clients will prove to be damaging in the long run.”
According to the Federation of Small Businesses:
- SMEs account for three-fifths of the employment and around half of turnover in the UK private sector
- Total employment in SMEs was 16.4 million (61% of the total), whilst turnover was estimated at £2.1tn (51%)
- Employment in small businesses (with 0 to 49 employees) was 12.9 million (48% of the total), with a turnover of £1.6tn (36%)
Lynne continues: “Thankfully, SMEs can lean on other support foundations other than banking partners these days. The latest technologies can provide SMEs with automated and fully integrated services to help them through this difficult period. Solutions such as end-to-end credit management, automated payroll and invoice financing are just some of the tools now on offer which can assist SME survival.
“Having the ability to invest in fintech and other automated solutions is now a very real possibility for many SMEs. In the past, the expense of these solutions meant that the deep-pocketed larger corporations were the sole beneficiaries. Today, business leaders who place technology at the centre of operations correctly will be able to mitigate the economic risks which surrounds them.
“For example, SMEs now have the ability to credit check, chase overdue invoices and collect payments from one platform. This is a powerful alternative compared to manual credit control processes. Invoices do not get lost, finance departments have clarity over company finances and human error is eliminated from the entire credit control journey. Rather than relying on a bank to advise them on the state of their finances, SMEs can now take matters into their own hands and by harnessing technology instead.”
Lynne concludes: “It’s disappointing to see the negative consensus amongst SMEs right now towards their banking partners at a time when they need them most. Threats such as company insolvencies and late payments hinder the SME community far more compared to their bigger, more established counterparts. Technology has emerged as the lifeline for SMEs to turn to during the current crisis as banking partners prove to be unreliable support – whether or not the banks wake up to this shift in reliance remains to be seen.”