THE BLOG
12/12/2013 06:52 GMT | Updated 10/02/2014 05:59 GMT

Time for SMEs to Switch on Small Business Saturday

The significantly increased talk in recent years about how small businesses are the lifeblood of the economy has surprised me. It is as if the recessionary years suddenly made this so and they were somehow not the very same lifeblood before.

The fact remains that SMEs in this country have always been a core driver of economic growth, jobs and prosperity. That is why Small Business Saturday is such a welcome initiative in order to recognise this contribution, remind the wider population how important they are and why they should continue to support them day-to-day.

The stats are undeniable. 95 per cent of British businesses meet the European Union's definition of a small business - having a turnover or balance sheet of less than €2m and fewer than 10 employees. Put simply, the UK economy would be in a sorry state without our small businesses, and we all need to give them far greater support.

That is true not only of the general public, but of larger corporations and, yes, the financial sector. The headlines in this regard often focus quite understandably on lending, but it is equally important to talk about what finance is doing in order to provide better service for SMEs that ultimately make it easier for them to do business, grow and employ more people.

The recently-launched Current Account Switch Service received widespread coverage in the mainstream media. A huge number of consumers now know that it is easier than ever before to switch their bank if they are not satisfied with the service they are receiving. But this new service applies equally to SMEs, making it easy for businesses dissatisfied with their bank to move elsewhere, and there is a need for greater awareness amongst the SME community that this is the case.

More than 40 per cent of small firms that took part in a recent survey by the Federation of Small Businesses cited the process of switching banks as being slow and bureaucratic, and just four per cent have done so in the last year. Those stats are precisely why the new switching service was introduced: to make it simple for SMEs to change providers if they feel it is in the best interest of their business. The threat of excessive bureaucracy must never be a reason for inaction when a small business owner knows the end result is ultimately better for their business.

But that bureaucratic threat has been removed. Switching now takes just seven working days, significantly less than the average 18 to 30 days previously, and, crucially, it is designed so there is absolutely no disruption to the SME's business. The changeover date is the choice of the business not the bank, all existing payments are transferred automatically, and anything accidentally sent to the old account will be automatically redirected. The entire service has been constructed to ensure there is no disruption, which is crucial given that cashflow is king for small businesses.

The service is also covered by the Current Account Switch Guarantee, meaning that in the unlikely event of something going wrong, the SME is protected. This Guarantee ensures small businesses receive a clear and consistent level of service and that that they will be refunded any charges and interest in the event of a failure of the service.

SMEs now have choice. The fact that a difficult switching process was previously the core reason not to switch banks was utterly unacceptable. The industry has taken this on board and the new service ensures small firms are now in the driving seat to secure the banking services that best fit the needs of their business.

As plans for next year's Small Business Saturday begin, I hope the wider public takes note and gives their local businesses the support they so rightly deserve. I also hope that SMEs across the country become more aware of the changes in banking that make it easier than ever before for them to improve the service they receive.