Every day the media tells us about the lack of funding available to small businesses and about the general gloom surrounding growth and opportunities.

The strange thing is, from a business finance point of view, I cannot see why this is the case.

In fact the institutional financiers I work with are desperate to lend money; the private individuals I work with are also keen to lend money.

So why aren’t companies flooding through accountant’s doors for business finance opportunities?

Part of the problem is the rise of the so-called ‘zombie company’ mentality. Companies that borrowed extensively during the good times now have to focus on repaying debts rather than thinking about growth. Any movement in interest rates could have a terminal effect on many zombie companies.

The wider concern for the economy is that money tied up in struggling companies is not available for more vibrant small businesses or entrepreneurs.

In reality many businesses are desperate for business finance to help them grow. However they are either too concerned about applying for finance because they “know they will be turned down” or simply don’t know about the many alternative sources of business money available to them.

Invoice finance, single invoice finance, purchase order finance, asset finance, small sum equity finance and retail finance: These are the business finance tools fast replacing the virtually redundant bank overdraft. They are all easily available and in plentiful supply.

What the future of alternative business finance holds for accountants

Accountants are the natural choice for companies to turn to for matters concerning business finance needs. But why are companies taking so long to commit to alternative business finance products?

It could be that the company is just not convinced about the new financial tool

The company has thought about it, come close to buying… but something is holding it back. It’s not convinced that its accountant’s advice is the best choice for its money or time. It will have further questions and will need further understanding of the product before committing.

The company has no sense of urgency

It doesn’t need to buy now. Having found the solution, the company knows it is out there and it will sign up to it if it remembers. There’s nothing motivating the company to move faster or to choose its accountant’s advice over someone else’s.

Rest assured, the moment will come. In the meantime accountants need to:

Know that it is speaking to the decision maker

You know the game of Chinese whispers? A message is relayed through a line of people. The end message is often vastly different from the original. If an accountant’s original advice isn’t communicated to the ultimate decision maker, key points about a complex financial product can be easily lost in translation.

Know what to do if a client fails to respond to advice given

An accountant has a professional relationship with its clients that it will not wish to upset by ringing and leaving a string of messages.

However just because a company has gone quiet does not mean that it has lost interest.

To recap, the urgency may have gone out of a situation, the product may not be quite right, or the accountant’s client may just be very busy.

In this situation a simple and to the point email will reinforce the accountant’s role as a professional services provider and should prompt the desired response.

Furthermore, a simple email will provide an accountant’s client with a “way out” if it is not interested, or provide the accountant with a simple acknowledgement of the fact that it is busy. There is nothing wrong with an accountant being blunt in an email, as long as it is polite!

Of course there is no easy way to get a prospective client to commit to buying business finance. It is a fact of life that decision-making lead times have increased, and companies are cautious about committing to anything.

However rest assured there are many business finance products available to companies that provide an alternative to the bank overdraft. Educating clients about alternative forms of readily available business finance will certainly help accountancy practices to develop and grow.

Author: Simon Button  Simon is a highly respected business finance broker who has worked in the commercial finance sector for over 25 years.

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