A fifth of accountants have found their clients have been refused finance or
had their funding restricted as a result of the credit crunch, according to
The findings present one of the earliest tangible signs that the profession
is grappling with the effects of the downturn.
The results prompted warnings that accountants would have to get tough with
their clients to focus on cost cutting and that the environment for business had
Dennis Turner, chief economist at HSBC, said: ‘The post credit crunch world
will be quite different and banks will price risk’.
He added: ‘Banks are genuinely short on the volume of money they now have
Nick Hood, a business recovery specialist with Begbies Traynor, said: ‘There
is a glorious optimism in the UK and it’s not linked to commercial reality.’
‘Accountants have to advise their clients to be tougher and that this is the
time to be hard nosed’.
Companies such as General Trading, which ran the wedding list for Prince
Charles, and business class airline Silverjet, are among the companies that have
helped increase the number of administrations that have taken place since the
credit crunch took hold.
The research comes from the 2008 Venture Finance Accountants Spotlight
Survey. Venture’s managing director Peter Ewen said: ‘It is clear that
tightening lending criteria and credit conditions are starting to bite UK
Guy Rigby, head of entrepreneurs at Smith & Williamson, believes the
conditions are more benign, but said: ‘There are no safety nets anymore as banks
are no longer able to help.’
Others in the profession believe the environment is not so bad.
Hugh Brown, a partner in debt advisory at PwC, said: ‘Businesses used to
borrow against a property which they can’t do anymore.’
‘Now they borrow based on cashflow. Not everyone stretched themselves to the
The Venture Finance research also revealed that a quarter of the accountants
polled believe that their clients are more nervous about investing in their
businesses, while 41% said the government should cut business taxation to help
alleviate the effects of the credit crunch.
Around a third said action was needed to cut the money market (Libor) rate of
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