Looking for good service? Dont bank on it...

Following news that high street banks are failing to provide the support and service that the UKís small business community needs leading small business cash flow specialist Bibby Financial Services is urging owners and managers to explore the many viable alternatives to traditional bank funding.

A recent Bibby Financial Services survey found that a quarter of small firms believe the quality of service offered by their bank has deteriorated over the years and a further one in 10 owners and managers claim the service they receive from their bank is ëpoorí, suggesting that Britainís high street banks are failing the countryís small businesses**.

While business owners and managers up and down the country bemoan the poor service they receive from the big banks, it would appear that traditional bank funding is still the mainstay of business finance in the UK. In fact, the Bibby Financial Services survey found that bank funding in the form of loans and overdrafts continue to be the preferred choice for entrepreneurs after personal savings.***

David Robertson, chief executive of Bibby Financial Services, said: ìOnce again Britainís banks have been found to fall down on the service that they deliver the UKís 3.8 million small and medium sized businesses. This is hardly surprising given that so many banks are outsourcing much of their customer service operations to overseas call centres.

ìWhat concerns me is that given the big banksí appalling small business record, owners and managers continue to rely on bank finance and do not look at the other options available.î

Solutions such as factoring and invoice discounting have seen tremendous growth over the past decade, in fact according to the factoring industryís trade body, the Factors and Discounters Association (FDA), there are now more than 37,000 small firms in the UK benefiting from this non-traditional form of finance to fund their growth. Last year, a total of 8.7bn of funding was injected into the small and medium sized business sector by FDA members****.

Factoring and invoice discounting work by releasing the capital tied up in unpaid invoices, leading to an immediate cash injection for businesses. On receipt of an invoice from a client, a factor will pay up to 85% of its value within 24 hours. The factor then carries out the credit control on each invoice, on behalf of their client, sending out statements and chasing the debt until it is paid. Finally, the remaining 15%, less a service charge, is handed over to the client once payment is received.

David Robertson continues: ìIt is encouraging that more small business owners and managers are waking up to the benefit of exploring the many alternative funding options available to them. However, it would appear from the research that many entrepreneurs are still burying their heads in the sand by staying with their banks, when they could be receiving far better service and more effective funding solutions elsewhere.

ìOne of the benefits of dealing with an independent cash flow provider such as Bibby Financial Services is that unlike many bank customers, our clients have daily access to senior decision-makers enabling crucial funding decisions to be made quickly and effectively without having to defer to a remote head office. As well as providing flexible tailor made solutions where access to quality advice and support is always just a telephone call away.

ìI hope this Forum of Private Business report rings a warning bell to the UK ís big banks that they cannot continue to give a second rate service to small businesses who deserve so much more.î