Whether access to credit for smaller businesses has improved or not seems to depend on who you ask, but anecdotal evidence suggests it is still both difficult to access and expensive.
To make matters worse, recent research reveals that an alarming 62% of SMEs are now considered to be above the normal credit risk as regards the likelihood of their defaulting on trade payments or getting into financial difficulties.
In part, this is due to a lack of available information on SMEs’ accounts making it more difficult for the relevant agencies to assess their creditworthiness, a situation that has resulted from the reduction in the amount of information SMEs have to file with Companies House.
In the days of easy credit, this shortage of reliable financial information was less of a problem, but in today’s tight financial climate it seems to be having a harmful effect on the creditworthiness of many smaller businesses.
Without reliable and current information, banks, suppliers, credit insurers, and of course credit rating agencies will naturally be cautious in their assessments.
One way to mitigate the situation is to provide relevant parties with regular monthly management accounts prepared to acceptable standards. Indeed this is something that is now being required with greater frequency.
We would be happy to assist with this if you wish, and discuss other ways in which you might improve your creditworthiness.
