Here in the UK we’re seeing a change in the tides. The 2008 crash hailed the end of easy borrowing for businesses large and small – and helped foster a more diverse market for capital. But the days of excessive risk aversion by banks are gone, replaced by careful optimism and a measured appetite for business investment. We’re now seeing more and more high street banks lend to large companies, startups and SMEs. And it’s all thanks to the strengthening economy.
Net lending to small businesses by banks and building societies participating in the Bank of England’s Funding for Lending scheme (FLS) rose by £490m between April and June. This follows a rise of £648m in the first quarter and a £313m contraction in the same period a year ago. It looks like an improving UK economy is paying off (literally) for small and medium sized businesses.
Likewise, large enterprises are also reaping similar benefits thanks to consequential job growth which has done more than just lowering the UK’s unemployment rate. It has allowed large enterprises to expand their businesses easily thanks to the surge of qualified and experienced employees that have become more available.
However,businesses will not be able to optimise on this access to finance if they don’t tighten up their back end reporting. Namely, if small businesses don’t report and track key KPIs effectively then they will never be able to make the most of UK banks’ improved confidence levels.
One of the best ways that small and medium sized businesses can become more efficient is by improving the tracking of one of their principal KPIs – their Profit and Loss accounts.
Any dedicated business owner or competent business administrator will know the value of an accurate P&L. It forms the basis of a business’s overall bookkeeping and, when completed properly, can act as a simple yet effective barometer of success which proves handy for securing investment.
Moreover, an accurate Profit and Loss account provides the stability on which a business is built on and will offer economic insights which will allow a small business to grow. All in all, in order for a small business to be successful, it’s vital that their Profit and Loss accounts are in line.
In the business world there is a very fine line between not having your financial processes work hard enough for you so that you miss out on the benefits of having slick business systems in place, and being bogged down by red tape where you spend all your time working through admin and never have any time to actually run the business.
In short, businesses sought to prioritise getting their reporting processes right before they begin to look for investment and loans. They need to capitalise on the improving UK economy rather than wasting opportunity on inefficient business processes.