Good Financial Communication Facilitates Access To Capital

Better financial communication can help small to medium enterprises (SMEs) in their quest for better financing, according to a Euler Hermes study.

Owings Mills, MD (PRWEB) September 1, 2005 -- Professional financial communication has considerable advantages for small and medium-sized enterprises (SMEs), as they may have easier access to financial funding, get better terms, and cooperate better with their capital providers. These are the central results of the representative study "Financial communication of SMEs," which was implemented on behalf of the Euler Hermes Group by the University of Erlangen-Nuremberg in Germany and accompanied by the BDI and the economic magazine Impulse.

However, not many SMEs are utilizing these opportunities. There is still a gap between what banks expect and what companies give them. The study shows that there is still a lot to catch up on in order to improve communication between small and medium companies and their capital providers:
Only every other SME likes to keep its capital providers well informed, while 40% find it aggravating.
SMEs offer their capital providers mainly standard information like balance sheets and profit-and-loss-accounts, despite capital providers expecting much more.
Only 43% of companies know what the capital providers do with the information given.
The company's decision for financial communication stems from the fear of facing disadvantages without maintaining communication rather than a result of the conviction that it offers advantages.

"Perfect financial communication is on time, comprehensive, and correct. And it is a dialogue between the entrepreneur and the capital provider in which they view each other as partners," says Euler Hermes Management Board Member Holger Jensen. Jensen says SMEs increasingly suffer from lack of liquidity and additional economic pressures, and the study verifies that companies that inform their capital providers comprehensively are better protected against such crises. "SMEs therefore are well advised to give up their reserve against financial communication," he adds.

"With this study small and medium-sized companies are getting precise recommendations for their communication in order to better cooperate with their capital providers. Those who follow them will optimize their company financing," says Holger Externbrink, Head of Department Financing at the economic magazine Impulse. Externbrink says by following the recommendations SMEs may improve their position in the market.

"A pro-active information policy with banks and other capital providers is a competitive edge that is not to be underestimated. With this policy small and medium companies hold a decisive factor for their future success in their hands," states Arndt G. Kirchhoff, CEO of the BDI-Committee for SMEs. "With this study we want to sensitize SMEs for the increasing importance of professional financial communication." Kirchhoff believes many companies simply have no idea of how much advantage open financial communication can offer them -- it contributes to a realistic rating of the company and professional management, thus reinforcing sustainable development. "Only those who know their weakness can eliminate them," concludes Kirchhoff.

For more information on the study and the Euler Hermes Group, visit www.eulerhermes.com/usa.

Euler Hermes is the worldwide leader in credit insurance and one of the leaders in bonding and guarantees. With 5,400 employees in 40 countries, Euler Hermes offers a complete range of services for the management of customer receivables and posted a consolidated turnover of 1.9 billion euros in 2004. The North American subsidiary (Euler Hermes ACI) is headquartered in Owings Mills, MD. For more information visit www.eulerhermes.com.

Euler Hermes, a subsidiary of AGF and a member of Allianz, is listed on Euronext Paris. Standard & Poor's rates the group and its principal credit insurance subsidiaries AA-.

Press Contacts:
U.S.
Rick Ostopowicz
Public Relations and Communications Specialist
Euler Hermes ACI
Phone: (410) 753-0652
Email: rick.ostopowicz@eulerhermes.com

Hamburg
Barbara Stieghan
Public Relations
Euler Hermes Kreditversicherungs-AG
Phone: +49 40 8834-1528
Email: barbara.stieghan@eulerhermes.com

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