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Business lobby group support Government’s business finance initiative

The Government’s new Finance Fitness campaign, which aims to help small businesses manage their affairs better and access funds, has been welcomed by the Forum of Private Business.

Launched by Business Minister Mark Prisk, the scheme will see Government offering SME’s advice on cash flow management, and the importance of maintaining a good credit rating for lending purposes.

While the FPB support the initiative, the lobby group stresses that it is still down to the banks to deliver on their pledge to increase lending, without which any assistance is pointless.

In order to play their part, they suggest the banks must increase lending, reduce borrowing costs, and early repayment penalties, and return to localised decision making on lending.

Alex Jackman, the Forum’s senior policy adviser, said: “In an economic environment characterised by continuing credit restrictions, clear and thorough financial information is demanded by the finance and credit industry to assess risk.

“Any help for businesses to maximise their chance of getting a ‘yes’ from their bank manager is clearly welcome news for SMEs, and sends out a positive message that government understands enterprise is the key to getting the economy back on track.

“But while it remains unsustainable for lenders’ decisions on credit worthiness to be made centrally and using over-centralised risk aversion criteria, business owners should be proactive in controlling their own destinies.”

He added that in order to do so, businesses needed to react to the demands of lenders by providing thorough financial projections, with up to date, accurate financial information.

The Government’s new scheme will also see firms made aware of alternate sources of credit, as opposed to the usual high street lenders.

Advice will also be offered on issues around late payment, the time small firms are waiting to be paid by customers, the impact this has on businesses, as well as advice on how to get paid on time.

Mr Jackman added: “It’s high time that the Government put the spotlight on the importance of businesses’ finances.

“Many small businesses only approach banks for funding when cash flow is at its lowest, which of course is the worst time to negotiate a good deal.

“Solid advice from those who represent business, coupled with a Government drive to raise awareness, will help small businesses to better manage their finances in tough economic times and reap the benefits of better credit scores and improved invoicing processes.

“Of course, concrete Government action in the area of late payment would be even more helpful, and the Forum will use the opportunity of a spotlight on financial readiness to lobby for more to be done to tackle this issue.”

This was posted in Bdaily's Members' News section by Tom Keighley .