Almost two thirds of credit and finance professionals believe the lack of available commercial finance could harm the health of their clients’ businesses, according to research by Graydon.The lack of availability of credit and the fall in consumer spending are viewed by UK businesses as posing the biggest threats to their clients’ ability to settle their invoices, with 62% of credit and finance professionals believing that the continued lack of finance available to firms could be harmful to the health of their clients’ businesses.
The research also found that 42% are concerned that increasingly cautious consumers will impact on their clients’ ability to settle their bills.
Despite the concerns, less than half (49%) of companies are credit insured, down from 51% last year. Those businesses with credit insurance, however, are insuring a much higher proportion of their business than in 2010.
Meanwhile 39% of respondents reported that their level of credit insurance is higher than last year, 18% of those without credit insurance report that cover is too expensive and does not offer value for money.
Gordon Skaljak, spokesperson at Graydon UK, said: “At the same time businesses’ finances are coming under pressure as banks tighten up their lending criteria further, and the scaling down of HMRC’s “Time to Pay” scheme means that firms experiencing temporary blips in their cash flow no longer have a safe haven to turn to. Firms may find it increasingly difficult to keep their heads above water, which could also put their suppliers on shaky ground.”
As well as increasing their level of credit insurance, firms are also increasing their use of credit referencing agencies, with 80% reporting that they obtain credit reports on their customers in order to protect themselves from bad debts, up from 65% in 2010.
Debt collection agencies are also being employed by firms more frequently, with 47% of respondents reporting that they have turned to debt recovery firms this year, up from 25% in 2010.