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Accountants issue warning over small business finances
Accountancy News |
31/08/2010
Small and medium-sized enterprises (SMEs) may be yet to experience the worst effects of the recession, according to a new report.
Venture Finance's 2010 Credit Check survey, conducted jointly with Accountancy Magazine, suggests that almost two-thirds of industry professionals believe more insolvencies are likely to be seen within the sector.
Accountants questioned for the survey said they believed that ten per cent of their clients will go out of business in the near future.
Some 35 per cent of respondents said small businesses are still being held back by the legacy of the recession, reports SMEWeb.
This is despite the economy returning to growth during the final quarter of 2009, with 0.4 per cent economic growth witnessed between October and December.
A third of the 250 accountants interviewed said they believe overall business strength is weak or very weak.
Peter Ewen, managing director at Venture Finance, described SMEs as "the engine of economic recovery".
However, he said the research suggests that businesses are still struggling to access the finance needed to move from a survival mentality to one of growth.
"Accountants are telling us that traditional financing methods are not meeting today's business needs."
Last month, official figures revealed there had been a significant rise in the number of Scottish business insolvencies.
Data issued by the Accountant in Bankruptcy for the second quarter of 2010 pointed to a 66 per cent rise in the number of collapsed businesses north of the border.
In total, 304 companies were declared insolvent between April and June, either by themselves or business creditors, up from 183 in the equivalent period in 2009.
Posted by Stephen Wilkinson
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