Europe’s largest credit management organisation, the Institute of Credit Management (ICM), has launched a petition in conjunction with the commercial credit referencing agency Graydon UK, to prompt a Government rethink on plans to exempt micro-businesses from having to file accounts at Companies House. They claim that these plans will seriously hamper the economic recovery rather than encourage it.
The move follows the publication of figures from a recent survey of the ICM’s eight thousand members which posed the question:
‘If accounts for a potential customer wanting to place a relatively small order with you were not available at Companies House or via a Credit Reference agency, what would you do?’
Over a third of respondents said that they would not approve the order for immediate supply and would instead reject the account application and insist on payment by cash in advance. 15 per cent said they would accept the increased risk and trade with the micro-business regardless, while nearly half (48 per cent) said that they would ask the customer to provide some sort of financial data to support any application for credit.
The ICM say that these findings support their view that exempting micro-business – usually defined as small businesses with fewer than ten employees – from filing accounts is wholly the wrong way of tackling what should be a comparatively simple issue – that in the current financial climate businesses should be prepared to provide more information not less:
“Without audited numbers that can be trusted, banks will not lend and suppliers will not extend credit to their customers,” said ICM Chief Executive Philip King. “Growth will be restricted, not encouraged.”
The survey follows similar research from Graydon UK in June 2011 that showed that a staggering 91 per cent of credit and finance professionals believe that the proposals will make it harder for small businesses to access trade credit, and that 87 per cent of respondents did not believe that the Government’s new plans for small business reporting will help drive business growth.
Photo by Steve Ryan – CC
