“Epitaph for the Overdraft”

LONDON -

- 80% of Professional Advisers State Their Clients Have Been Refused an Overdraft or had it Withdrawn

SME Invoice Finance, leading independent invoice discounting company, has sponsored a comprehensive survey into the attitudes and perceptions of professional advisers.

The findings, based on independent research conducted with financial intermediaries in June / July 2009, reveal that alarmingly, 80% of advisers stated that clients had been refused overdraft facilities or had them withdrawn as a result of the credit crunch. Furthermore, three quarters of respondents said that either some or all of their clients had seen a reduction in the availability of finance over the past six months.

The advice from professional advisers to business owners is to look to invoice finance as a solution. The survey findings highlight that 57% of advisers are more likely to recommend invoice discounting, 55% are more likely to offer factoring, whereas in direct contrast, 47% of advisers are now less likely to recommend bank overdraft facilities since the downturn.

John Wilde, Sales & Marketing Director of SME Invoice Finance said: “Many established businesses are turning to invoice discounting for the first time. Encouragingly, advisers are seeing the critical role that invoice discounting plays, not only in all phases of the recovery but also in actively delivering sustainable business and economic growth.”

In response to the survey findings, Kate Sharp, CEO of the Asset Based Finance Association (ABFA), comments: “I am delighted that invoice finance is at last taking its rightful place as the first choice product for working capital funding. The flexibility of invoice finance and the dynamic relationship of the finance to business performance have always made it a superior cashflow product. Amongst the economic gloom, factoring and invoice discounting offer a beacon of light to many UK SMEs.”

31% of advisers stated that even though their clients had been turned down for finance, the banks had failed to notify them of the Enterprise Finance Guarantee Scheme. To the advisers’ knowledge, only 22% of clients had been informed of the scheme by the banks, following its inception in January 2009.

The findings show that 56% of advisers believe that UK businesses will emerge from the downturn in 2010, 31% in 2011 and 9% after that period. However, only 4% felt that they would see the end to the downturn this year.

Source: SME Invoice Finance

For more information, please contact mike.symes at strandfinancial.com, +44(0)7736-008270