Are businesses becoming more like consumers?

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The market insight team at Bibby Financial Services are extremely active and I take an interest in contributing to the various reports my teams produce. Many of these reports are based on research conducted among our client-base, but others canvass opinion from the wider business community to offer insight on different issues important to SMEs.

Our latest study of 1,000 businesses in the UK shows that a significant proportion is considering the use of other forms of finance to their existing arrangement. The research highlights that many are not completely satisfied with their current funding provider, and this is naturally a driver for change.

Findings of the research beg the wider question of whether businesses are becoming more like consumers in relation to ‘switching’ funding sources. For many years consumers have been encouraged to seek-out better deals in relation to bank accounts, credit cards and energy suppliers to name some common examples.

Up to 20 per cent of businesses included in the latest survey say their current source of finance is inflexible. It’s clear that SMEs today expect much more flexibility in relation to the amount they can borrow, contract length and how they can access and manage finance online.

Cost effective funding

More than a third of businesses surveyed said a cheaper deal would encourage them to consider a new arrangement, almost one in five (17 per cent) cited a shorter term agreement as desirable, and 15 per cent of SMEs said they would like to try a providers’ services before committing.

Again, this ‘try before you buy’ ethos is common place in consumer markets, so why not in relation to business funding?

Building solid foundations

Increasing funding available to SMEs is critical to building solid foundations for sustainable economic growth, but it’s evident that funders need to become more flexible in their approach if they are to meet the growing demands of the marketplace.

In relation to switching finance providers, there were a number of reasons other SMEs showed caution including perceived setting-up costs, uncertainty of customer service and a lack of information about non-traditional forms of finance available.

More flexibility

In order to help SMEs find the most suitable source of funding for their business model, firstly more information needs to be provided about the options but the finance sector also needs to offer more flexibility to enable potential customers to make informed decisions.

Our autumn offer

For this very reason, this month we launched an offer for businesses that turnover between £500,000 and £1.5million.

The offer is available until 30 November and as part of this offer we will waive all setup costs and fees that are usually charged as part of an invoice finance agreement for the first month.

We’re confident that the service we offer is second to none and that customers will choose to stay with us because of this. However, if a business decides that invoice finance isn’t right for them, after the first month they can cancel the arrangement at any time by giving just one months’ notice.

I believe the offer provides real solutions to the issues cited by businesses in the UK and I look forward to hearing feedback from qualifying SMEs.

In the meantime, please feel free to contact my team at Bibby Financial Services should you have any questions regarding our funding solutions.

Thanks again for reading.

About David Postings

David Postings is the UK Chief Executive Officer for Bibby Financial Services following his appointment in April 2012. David is an experienced senior executive with over 35 years’ experience in financial services. David has extensive knowledge of the commercial finance landscape.

You can read more about David Postings and his position at Bibby Financial Services in the About Me Section.