Trade credit for SMEs down an estimated £4.7bn since 2009

The number of small and medium-sized enterprises (SMEs) to have received trade credit has declined significantly in the last three years, with figures suggesting £4.7bn less has been made available since 2009.
 
Firms within traditional trades such as construction and building have traditionally been heavily reliant on trade credit in order to acquire necessary equipment and materials prior to the commencing of jobs.
 
These figures have been extracted from Experian’s BusinessIQ and highlight the fact trade credit has fallen among numerous sectors in the last few years and is currently at an all-time low.
 
In 2008, the number of SMEs taking advantage of trade credit stood at approximately 10 per cent. This figure fell to 9.2 per cent the following year and currently stands at just 6.1 per cent.
 
Max Firth, managing director of Experian UK & Ireland, believes the availability of trade credit could provide a much-needed lifeline to small businesses.
 
"Businesses dealing direct to trade need to consider the benefits to their organisation of offering credit terms, particularly to smaller, sound businesses that just need short-term support to avoid denying themselves the opportunity to growth through new customers and sales," he said.
 
"We are not advocating that businesses throw caution aside. Simply take steps to ensure that they are fully informed on their customers and suppliers’ current situation, so they can mitigate risk and make informed decisions about how much trade credit they can offer to whom with confidence."
 
By delving deeper into the BusinessIQ figure, it suggests the smallest SMEs have been hit hardest by the lack of trade credit.
 
In 2007, 90,000 firms with a turnover of less than £50,000 had access to trade credit, but this fell by almost 50 per cent the following year.
 
Meanwhile businesses with a turnover of less than £250,000 have also experienced a marked decline, with the number of firms accessing trade credit down by 17 per cent.

Date published 23 Apr 2013 | Last updated 23 Apr 2013