Small businesses need more competitive banks

I was recently invited along with a number of other small business owners to the Office of Fair Trading, which is writing a report on competition in the banking sector. The OFT wanted to consult with smaller firms about the banks. 

Had we seen their behaviour change since the crisis of 2008? Were they providing the small business sector with the service they needed?

This is not the first time there has been an investigation into competition in the banking sector. Back in 2000, the Cruickshank report identified a lack of it, and the truth is there has been little progress since then. The way the UK banking industry is structured impacts on the ability of small and medium firms to get the very best service compared with their international competitors. That is of great concern.

The financial crisis and the subsequent banking scandals have demonstrated that we are a long way from an effective system. The old problems that work against a competitive environment remain, such as the inability for businesses to switch bank accounts quickly and easily.

How can small businesses take the pain out of late payments?

If you are dealing direct with Government departments as an SME you are likely to be paid on time.

If on the other hand you are a second or third tier suppler as most small businesses are – the song remains the same and you are at the mercy of the accounts departments of the PLCs.

They will use all their leverage to get the most favourable payment terms. For most SMEs who do not want to lose that business or upset a customer, this is a cost that has to be absorbed. In the UK, small businesses finance big businesses and so far nothing the government has done in terms of legislation has seriously impacted this disgraceful scenario....

To read the full article, vist The Guardian here.