An “overwhelming majority” of finance professionals believe the government’s proposals to exempt micro-businesses from filing statutory accounts will make it harder for firms to access trade credit.
Without financial information that can be trusted, suppliers will not extend credit to their customers, says Philip King, the chief executive of the Institute of Credit Management.
“Access to credit comes from greater access to information, not less. Exempting micro businesses from filing accounts is wholly the wrong way of tackling what is a comparatively simple issue: businesses should be prepared to provide more information, not less,” he says. “Growth will be restricted, not encouraged.”
Research by credit reference agency Graydon shows that just eight per cent of businesses would agree to extend credit without having access to the company’s financial information.
“Suppliers are saying that being deprived of access to their customers’ accounts will hinder small businesses in gaining access to credit and finance from their company,” says Martin Williams of Graydon.
“This isn’t the silver bullet the government is looking for to reduce red tape for businesses, and actually risks causing not only more damage, but more administrative work for SMEs if trade suppliers have to request accounts directly from SMEs themselves.”