The coming of the Business Bank for SMBs – friend or foe? by Andrew Jesse, Vice President, Basware UK

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Last week we heard further announcements about the ‘Business Bank’ from Business Secretary Vince Cable. The plan is for government funding to support small businesses as they look to grow, create jobs and bring additional revenue into the UK. However, as important as it is to support SMBs, this initiative is destined to long-term failure.

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The fact that they have to seek financing to stay in business does mean that easier access to finance will sustain some businesses. It won’t, however, encourage or stimulate growth.

The availability of finance will help, but not to achieve the goals of the Business Bank. Too many small businesses rely on finance to bridge cashflow, allowing them to survive one month to the next.

The fact that they have to seek financing to stay in business does mean that easier access to finance will sustain some businesses. It won’t, however, encourage or stimulate growth.

By temporarily prolonging the lives of struggling small businesses, more bad investments will be made which will put the British economy into a worse state, not a better one.

The solution is that alongside this extra financing, we need regulations on financial processes – especially invoicing and payments collection – that improve the transparency, stability and efficiency of British companies. This will help to minimise the need for cashflow financing and in the situations where it is required, the transparency of the financial process will create a strong case for funding.

This approach will help to ease the month-to-month operation of a business – especially an SMB – so that it can access finance and focus other resources on growing its business through investment and new leads. Whether expanding in the UK or operating internationally, SMBs need to be built on solid foundations, not just financing.

So what now?
The Prompt Payment code is a good initiative, but 38% of businesses still admit to paying their invoices late. It’s clear that something needs to be done to ease cashflow.

If the government brings in stricter new measures, this could mean better cashflow and funding for SMBs that can actually be used for growth – that’s what both they and the UK economy need.

About Basware
Basware is the global leader in cloud based e-invoicing and purchase-to-pay solutions with more than 1,000,000 users in over 60 countries. Basware’s B2B Cloud solutions and services provide an open, secure and global ecosystem for buyer and supplier collaboration, connecting more than 1.9 million buyers and suppliers globally. The solutions are architected to meet the needs of SMEs and global enterprises and are built upon Basware’s deep knowledge and experience of B2B financial processes, coupled with intelligent cloud connectivity and the Open Network. With Basware, organizations benefit from more efficient procurement, accounts payable and accounts receivable processes, sustainable cost savings, better insight to cash flows and improved buyer-supplier relationships. The solutions are available via the cloud, on-premise or through business process outsourcing in Europe, the US, and Asia-Pacific through an extensive network of Basware offices and business partners. http://www.basware.com

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Duncan Burford
Basware UK
+44 (0)207 802 2626
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Andrew Jesse
Basware UK
+44 (0)845 6711953
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