Mid-sized firms ‘need stable income’

The UK’s economically crucial medium-sized firms may find their growth ambitions impeded by a lack of long-term finance, according to a report from the Confederation of British Industry.

 

According to figures from the CBI, 70% of mid-sized businesses or MSBs plan to grow over the coming year, making them key to the UK’s overall investment performance and productivity.

midsixe firms stable income


However, at this level, investors often want the best possible return over the short term, making it very difficult to obtain growth finance for more than five years at the most.

 

The CBI is now calling for incentive schemes to encourage savers and investors to place funds into MSBs for longer, in exchange for income tax relief and a return based on yield rather than capital gain.

 

John Cridland, director general of the CBI, said: “Building up a British ‘mittelstand’ of successful medium-sized businesses is mission-critical to our economic future. With little recognition, these firms quietly toil away, creating jobs in communities and boosting growth in every corner of the nation.

 

“A key part of unlocking their enormous potential is for the government to fix the funding ladder, filling in the gaps in supply of long-term finance that the UK’s brightest growing firms need to succeed.”

 

The report refers to MSBs as the UK economy’s “forgotten army”, accounting for 1.8% of all companies nationwide, but employing 16% of the workforce and generating almost 25% of the private sector’s revenue.

 

In many cases these firms may be able to improve their long-term finances simply by focusing on more effective credit control measures.

 

With revenue relatively high compared to their share of the workforce and the total number of companies, it is clear that MSBs have money coming in – it is simply a case of keeping cash flow as liquid as possible.

 

Prompt invoicing and effective follow-up, along with swift debt recovery action on overdue payments, all contributes towards effective credit control measures to maintain liquid cash flow and ultimately boost the disposable income available to the 70% of MSBs looking to expand in the coming 12 months.

 

http://news.cbi.org.uk/news/incentivise-savers-to-boost-investment-for-mid-sized-firms/

Leave a Reply

Your email address will not be published. Required fields are marked *

REQUEST A FREE CALLBACK