Small firms 'exposed' by poor financing decisions

30/08/2007

A large proportion of Britain's small firms are putting themselves at risk through risky financing, according to a new report.

The poll commissioned by Cattles Invoice Finance found 53 per cent of small start-ups are bankrolling their new business through their own savings, taking out credit cards or re-mortgaging the family home, reports the Herald.

If the business then proves unsuccessful such decisions could have very serious personal implications for the business' owner.

Applying to a bank for funding was the second most popular choice, with 24 per cent of new small firms using a bank loan, with a further ten per cent opting for an overdraft.

"Investing such a proportion of personal assets leaves SMEs exposed at an early stage in their lifecycle with no emergency funds left to fall back on," said Richard Waldman from Cattles Invoice Finance, reports the Herald.

He recommended invoice financing, claiming it offers advantages in terms of safety and security.

"By providing up to 90 per cent of the value of an invoice within 24 hours of issue, you can release capital into the business at a crucial time, while maintaining flexibility and control," he added.

© Adfero Ltd

 

 

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