Britain’s nearly 5m small businesses remain worried about a lack of access to credit, a shortage of skilled workers and poor broadband services, according to a recent article in the Financial Times.
UK’s private sector businesses are small and medium-sized enterprises, employing an estimated 14.4m, nearly 60 per cent of the private sector workforce. Their annual turnover is estimated at £1.6tn.
Late payments by larger corporations are one the biggest challenge SMEs face. As such they find themselves often in a cash squeeze of having to pay wages and / or suppliers, while waiting for clients to pay their bills promptly. This makes SMEs especially vulnerable to credit losses. One of the many reasons as to why banks are cautious in providing credit to SMEs.
A bill presented in the UK government proposes forcing companies to publish information about payment terms to suppliers. This addresses a long standing complaint by smaller businesses that say they have experienced delays in having their bills settled.
The bill also aims to improve access to finance for small businesses, a particular challenge during the financial crisis, when bank lending all but dried up. The Bank of England has recently published a document for consultation indicating that lack of information on SMEs may be part of the problem advocating mandated sharing of loan information by banks and the establishment of a credit register.
The UK government’s target of providing everyone in the UK with access to broadband with a download speed of at least 2 megabits per second is seen to be insufficient for today’s business needs. Many service oriented small businesses depend on broadband services to run their business. Thus, the lack of adequate broadband services are seen as a serious impediment for SME growth.
Source: Financial Times