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Survey finds SMEs focused on growth despite Brexit and US Elections

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Concern around Long-Term Growth Increases   
More than 60% of SMEs are concerned with their ability to finance long-term growth. While the UK, Germany and France show high levels of concern (over 60%) around financing long-term compared to short-term growth, Italian SMEs are split in the middle, mirroring the current economic and banking instability the country is experiencing. If SMEs had access to additional reasonably priced liquidity, more than three quarters would use it to finance long term growth plans and purchase more inventory or equipment and invest in new technologies.

"The increasing need for liquidity is pressing SMEs to pursue a variety of funding sources."

SMEs Diversify Sources of Financing 
Overall, SMEs are adopting a wide variety of sources to finance themselves including traditional banking options like credit lines and asset-back loans which have increased in popularity since 2015, especially for larger SMEs. Invoice financing solutions (ranging from supply chain financing, factoring and invoice discounting) are providing funding to almost 20% of the surveyed SMEs and 18% of are using peer-to-peer lending.

Cash flow from operations remains the most significant source of SME funding with 76% of SMEs in EMEA and in the US relying on their own profit to survive and grow. Unlocking the potential of invoices, due and owned, appears to be the favorite SME working capital strategy, even compared with 2015 (58%). Additionally, over 75% of SMEs in EMEA believe the Brexit referendum will have no impact on their ability to access financing.

Early Payment Options Important to SMEs
Late payment practices are prevalent with 19 percent of SMEs reporting that their customers often pay invoices later than expected. In the US, the percentage of late payers has decreased from 20% in 2015 to 14% in 2016. Quite the opposite in the UK, where late payments occurred more frequently in 2016 (20%) compared to 2015 (11%). In Italy, 50% of customers pay their invoices late to the surveyed SMEs. The largest SMEs can rely on the most customers paying on time (83%).

When deciding which customers to do business with, 75% of respondents declare that it is important that their customers offer supplier friendly accelerated payment options. In the US, the perceived importance of early payment facilities has increased from 56% in 2015 to 77% in 2016.

"The increasing need for liquidity is pressing SMEs to pursue a variety of funding sources,"  said Colin Sharp, SVP EMEA at C2FO. "However, as the large majority of SMEs still finance themselves with cash flow from operations, there is a significant opportunity for businesses to optimize working capital through better relationships with customers and better use of accounts receivables."

 

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