Lack of finance hindering growth of small firms

Business conditions remain tough in the UK and many other countries around the world at present. With this in mind, it is particularly important for firms to protect their cash flow and the use of credit management and trade credit insurance may help them achieve this.

However, many enterprises are reporting problems when it comes to achieving target growth levels. According to the latest Quoted Companies Alliance (QCA)/BDO Small and Mid-Cap Sentiment Index, six in ten of such firms polled reported that capital markets are hindering their growth plans.

Of the enterprises claiming their projected growth has been hindered, 76 per cent cited a lack of liquidity as the main reason. Credit management and trade credit insurance can boost liquidity by aiding cash flow.

Responding to the findings, BDO partner Scott Knight said: "Mid-cap companies evidently feel hamstrung - our clients tell us they're delivering to their targets and their growth plans are sound but this isn't reflected in the valuations they get.

"The capital markets must recognise results and give appropriate valuations to ensure businesses have a chance of achieving their growth potential at a time when the economy needs it most."

Meanwhile, QCA chief executive officer Tim Ward added that change is required from policymakers and market providers to improve the channels of finance to firms that are a key source of growth.

It was also found that there is a general pessimism concerning the UK economy as a whole, with an average optimism score of 39 recorded. Anything above 50 is positive, with 100 representing 'very optimistic', while below 50, it is negative.

However, the organisations polled did feel optimistic about their prospects over the coming year, with an average optimism score of 64 reported.

There is considerable economic uncertainty at present as the eurozone crisis continues to make its impact felt and the US recovery remains sluggish.

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