Debt remains an obstacle for small businesses

Fri, 16 Apr 2010

The fragile British economy has left small businesses wading through considerable debts as the financial recession continues to take its toll. Research conducted by NatWest and the Royal Bank of Scotland indicates that a staggering seventy-five percent of small and medium sized enterprises (SMEs) are struggling with the debt caused by late payments from both providers and customers. Despite the financial crisis, the research reportedly highlights the fact that less than fifty percent of those businesses have instigated procedures to reduce the loss of income and capital .

NatWest and RBS chairman for small business operations – Peter Ibbetson, has reportedly commented on the issue, emphasising the reluctance of SMEs to employ the services of banks and building societies due to previous business loan experiences and the extra charges they have incurred. As a direct result, an estimated fifteen point seven billion pounds worth of invoices are thought to be in excess of one hundred and twenty days late.

In contrast, some businesses have used this period of debt and economic downturn to actively streamline their company and improve overall procedures and cash flow. Research from Barclays has drawn attention to this approach by analysing the data of one thousand companies; the results reportedly indicate small businesses are going to great lengths in order to clear debt and to gain debt assistance . According to a report, the research shows the debt write-off for SMEs has doubled in comparison to last year's figures; with two thousand, five-hundred and twenty-nine pounds being paid off from approximately seven hundred and twenty-thousand small to medium sized enterprises.
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