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Why SMEs need your advice on finance

17th Oct 2023
Brought to you by
Allica Bank logo
Allica Bank is Britain’s award-winning business bank focused exclusively on supporting established...
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Have you found this content useful? Use the button above to save it to your profile.

Even in boom times, cash is a perennial issue for SMEs. And when conditions turn, as they have in recent times with high inflation, volatile demand and increasing costs, a cash crunch can be fatal.

SME owner
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As the trusted partner for SMEs on all things financial, accountants already play a key role in monitoring cash within businesses, managing accounts payable and receivable, forecasting revenue and advising on sound cash management processes. All of these play an essential role in keeping your clients solvent, but the continuing rise of non-high-street lenders presents a new opportunity to add value. 

By working with clients to understand the potential gaps in their cash flow, accountants and bookkeepers can also help them access finance and credit that suits their needs, ensuring robust data quality, planning for spending and managing potential repayments. 

The SME lending challenge 

Securing credit at reasonable rates has long been a challenge for SMEs. Success rates for business loan applications fell sharply in 2022 from 80% year-on-year to just 60%, while gross lending volumes from banks to businesses are forecast to contract 3.8% in 2023,  from net growth of 3.7% in 2022. 

Research from Q1 2023 found that just one in eight small businesses (12%) described the affordability and availability of new finance as good, with over half (51%) saying it is poor or very poor. This has been reflected in a rise of new lenders, with finance from providers that aren’t the traditional ‘big 5’ banks totalling 55% of gross lending to small firms in 2022 – a record high

The power of new lenders 

One of the key reasons that the traditional lenders fall short when it comes to SMEs is technology –financial institutions often still use legacy infrastructure that struggles to properly assess an SME or interact with the many sources of data now available, resulting in a significant funding gap. Newer lenders such as Allica Bank are helping close this gap, leveraging a technology-driven approach that makes the funding process more efficient and personalised for SMEs to help them source the finance they need faster.  

The role of accountants in financing 

By working with clients to plan, assess and secure financing, accountants can provide value far beyond number-crunching and compliance, acting as crucial navigators in the fast-evolving business finance landscape. Just as the right funding option can help SMEs survive and thrive, the wrong choice can leave owners saddled with unsustainable debt, rigid terms or collateral at risk.  

Financial preparation: Accountants can lay the foundations for lending, ensuring clients’ financial health, helping to identify areas of improvement and steering businesses towards the most beneficial funding avenues. 

Making the right choice: The financial ecosystem is complex, ever-changing and often overwhelming for SMEs. Accountants play a critical role in providing clarity in this landscape, offering guidance on the suitability of different finance options, from traditional banks to challenger banks, such as Allica Bank. 

Ensuring a sustainable future: The right support and advice plays a key role in building a sustainable financial future for your clients. By working with clients to budget, forecast, and plan, accountants can help clients leverage a range of financial products to meet both short-term needs and long-term growth objectives. 

Creating collaborative financial partnerships  

Allica Bank is committed to developing strong relationships with established SMEs and their accountants to help businesses access the finance they need to grow. We do this through our combination of relationships – every one of our current account customers gets a dedicated relationship manager –human expertise, and our award-winning technology. 

Reach out to your local Allica Bank relationship manager about how your client might be able to benefit.

Find your local relationship manager