Small and Medium-sized Enterprises (SMEs) are increasingly overlooking business loans in favour of costly credit facilities to solve short-term cash flow problems, claims the Association of Chartered Certified Accountants (ACCA).
The costly credit facilities that ACCA refers to include hire purchase schemes, personal credit cards and second mortgages. Additionally ACCA believes that many SMEs are choosing to employ factoring firms which, in return for a percentage of the debts collected, provide them with instant capital while the factoring firm chases money which is owed.
