Small businesses throughout the UK put more faith in their accountants than their banks managers when it comes to seeking financial advice, according to new research findings that have been released today.  The majority of small businesses questioned confessed to seeking advice fewer than four times per year from their bank managers.

Carried out by the commercial credit agency Graydon UK and the FPB (Forum of Private Business), the study questioned four hundred small businesses about their individual experiences when seeking financial advice from their bank managers.  The findings showed that 47 per cent of small businesses questioned took the advice from their bank managers as trusted information, compared to a gigantic 70 per cent of small businesses chose to consult their accountants for the same sort of guidance.

A further 36 per cent of those questioned confessed that they have not met with either of their bank managers or accountants within the last year, and a quarter (24 per cent to be exact) blamed the lack of contact on either a loss of faith or the fact that have received bad financial counselling previously.

Managing Director of Graydon UK, Martin Williams said, “The traditional ‘grey-haired pillar of society’ stereotype of the bank manager as a trusted and respected source of financial advice has faded into the past. But as the economy hits upon hard times and banks become increasingly nervous about credit limits, SMEs need now, more than ever, to maintain a close dialogue with their bank managers.”

The findings from the survey also showed that 20 per cent of small business owners and managers sought financial counselling quarterly or more regularly.  68 per cent of those questioned admitted that they would only choose to seek advice when they think it is truly necessary.  Although this is clearly a method of choice for many small businesses in the UK, it could also turn out to be their downfall and these companies may be seeking advice that will simply be too little, too late.

Martin Williams went on to say, “We certainly do not want a repeat of the last recession, when the relationship between banks and small businesses broke down completely.”

Phil Orford, the Forum of Private Business chief executive, said, ““An issue that has not been reported as widely as lending restrictions is the declining level of service being offered by the banks. There is an increasing trend of established relationship managers being replaced by individuals in call centres, which leads to the loss of long-standing and profitable business banking relationships.

“In light of these changes, it is not surprising that more small-business-owners are turning to trusted accountants rather than their bank managers when seeking financial advice. However, it is a concern that they are not sourcing help more frequently, particularly in these testing times. A return to previous levels of service – which means good working relationships between bank managers and business-owners – would allow banks to manage risk more effectively and provide the appropriate access to finance to those that need it.”

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